Consistent with our previous articles, in late 2020, the SBA began requiring borrowers with loans of $ 2 million or more to complete a PPP Loan Requirement Form (Form 3509 (for profitable borrowers) or Form 3510 (non-profit borrowers) )) as part of the forgiveness process. These forms were the subject of a December 2020 lawsuit filed by the Associated General Contractors of America (“AGC”).
On June 23, 2021 and June 24, 2021, the AGC announced as part of the settlement negotiations that the SBA is expected to withdraw the forms. It now appears that on June 21, 2021, the SBA requested permission from the Office of Management and Budget (“OMB”) to discontinue use of Forms 3509 and 3510. The SBA letter says:
“… The Loan Requirements questionnaires had a deterrent effect and prevented the abuse of the program by applicants who could not in good faith provide proof of the need for a loan. Now that the SBA’s term has expired, such containment is no longer necessary. In addition, the SBA conducts loan need reviews using questionnaires on loan requirements for loans of $ 2 million or more if borrowers have applied for forgiveness. A significant number of these reviews have shown that borrowers have met the bona fide certification requirement.
… Removing these two forms will reduce the burden on PPP borrowers with loans of $ 2 million or more, as they will no longer be required to complete loan application forms to obtain forgiveness on their loans. The SBA will also be able to maintain its limited audit and review resources and be better equipped to process pardon decisions within the statutory timeframe. ”
In the first two weeks of July, the SBA began notifying PPP lenders that lenders would not be required to receive questionnaires as part of the forgiveness process. However, the SBA is still in the process of formally implementing this change and has indicated that it will do so shortly via the FAQ.
Necessity check continues: First drawing of PPP Loan Borrowers with loans of $ 2 million or more who have not those asking for forgiveness are the main beneficiaries of the cancellation of the forms. However, canceling the forms does not change the SBA’s review process for PPP loans. The SBA may take into account “the circumstances and actions of the borrower. both before and after borrower certification to the extent that it will help the SBA determine whether the borrower has complied in good faith with mandatory certification when applying for a PPP loan in the first draw. ”(Italics added.) FAQ 53.)
Support and documentation are still needed: Since the SBA verification procedures have not changed, all PPP borrowers are encouraged to continue collecting, documenting and retaining their “necessary” information and, in particular, use the information requested on the forms as a possible checklist. See “First Draw Loans of $ 2 Million and Above and PPP Requirements Questionnaires… »Borrowers should be prepared to provide their description or justification for ‘need’, if required or during verification. Borrowers must also collect and store information about eligibility for a loan, the calculation of the loan amount, and the use of funds. See “Updated key aspects of PPP documentation in accordance with the Law on Economic Assistance… “
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