AICPA Pushes Back on PPP Loan Necessity Questionnaire Response backed by 80 National Organizations


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AICPA Pushes Back on PPP Loan Necessity Questionnaire Response backed by 80 National Organizations

We previously discussed the U.S. Small Business Administration’s (SBA) issuance of two loan necessity questionnairesForm 3509 (used by for-profit entities) and Form 3510 (used by non-profit entities). This issuance was the first indication from the SBA as to how they might evaluate a business who borrowed $2 million or greater, together with their affiliates, “needed” their Paycheck Protection Program (PPP) loan. Upon applying for a PPP loan, all borrowers were required to certify that “[c]urrent economic uncertainty makes this loan necessary to support the ongoing operations.”   

With the 30-day comment period on the loan necessity questionnaires set to end on November 25, the American Institute of Certified Public Accounts (AICPA) issued their response. On November 17, the AICPA submitted a letter to Congress with not only their feedback, but collectively the comments from 80 leading national organizations representing the vast majority of the millions of small business borrowers and thousands of lenders participating in the PPP. 

The letter notes that “the questionnaires introduce a confusing and burdensome process for both borrowers and lenders, and we fear that it could lead the agencies to inappropriately question thousands of qualified PPP loans granted to struggling small businesses. On behalf of the millions of American workers supported by PPP loans, we urge you to act quickly to work directly with SBA and Treasury to avoid this unintended consequence. 

Referring to the loan necessity questionnaires, the AICPA further expressed their concern including, but not limited to the following: 

  1. Disconnect between the loan necessity questionnaires and the good faith certification regarding economic uncertainty; 
  1. Misplaced timing and reliance on data unrelated to program requirements; and 
  1. Administrative and procedural burdens on borrowers and lenders. 

Let Aprio Help 

The loan necessity questionnaires provide a better understanding of what information we believe the SBA plans to use to evaluate economic uncertainty and need. However, the nature and extent the SBA will rely on this information is to be determined.  Borrowers should review the questionnaires as part of their PPP loan risk assessment. We will continue to monitor the feedback during the 30-day comment period and track progress of the pending requirements. 

Aprio has established a dedicated PPP loan forgiveness team that is continuously monitoring new guidance from the SBA, as well as the Treasury, Congress and the IRS, to ensure we have the latest information when advising our clients. 

To discuss your documentation of economic uncertainty or how to interpret these pending requirementscontact Aprio’s dedicated PPP loan forgiveness team for a consultation. 

Disclaimer for services provided relative to SBA programs and the CARES Act
Aprio’s goal is to provide the most up to date information, along with our insights and current understanding of these programs and regulations to help you navigate your business response to COVID-19.

The rules regarding SBA programs are constantly being refined and clarified by the SBA and other agencies In certain instances, the guidance being provided by the agencies and/or the financial institutions is in direct conflict with other competing guidance, regulations and/or existing laws.

Due to the evolving nature of the situation and the lack of final published rules, Aprio cannot guarantee that additional changes or updates won’t be needed or forthcoming and the original advice given by Aprio may be affected by the evolving nature of the situation.

You need to evaluate and draw your own conclusions and determine your Company’s best approach relative to participation within these programs based on your Company’s specific circumstances, cash flow forecast and business strategy.

In situations where resources are provided by third parties, those services should be covered under a separate agreement directly with that service provider. Aprio is not responsible for the actions of any other third party.

Aprio encourages you to contact your legal counsel to address the legal implications of the impact of the CARES Act and specifically your participation in any of the SBA programs.