PPP Alert: SBA Issues Additional Guidance on Need for Loan Questionnaire | Cole schotz

The United States Small Business Administration (the “SBA“), in consultation with the Treasury Department, has further updated its Frequently Asked Questions (“Faq“) respecting the issuance of loan necessity questionnaires to certain paycheck protection programs (“PPP”) borrowers (“PPP borrowers“). These additional guidelines come nearly a month after the SBA initially issued questionnaires to PPP lenders (“PPP lenders”) For them to require completion by PPP borrowers who have borrowed $ 2 million or more in PPP loans, as detailed in our previous Alert. While many hoped that the SBA would remove some of the post-request inquiries from the PPP borrower’s bona fide economic needs questionnaire at the time of the application, the FAQs confirmed the continued use of the need questionnaires. loan in this context, including taking into account the circumstances subsequent to the request of a PPP borrower with regard to his “economic need”.

In accordance with FAQ 53, the SBA will continue to provide PPP lenders with the questionnaire to be distributed to PPP borrowers who have borrowed $ 2 million or more, for the purpose of reviewing these loans (and other loans, if applicable). in terms of eligibility, fraud or abuse and compliance. with PPP loan cancellation requirements. The SBA has indicated that it will use the questionnaire as a screening mechanism to assess the initial certification of a PPP borrower’s “economic need” when applying (i.e., “[c]the current economic uncertainty makes [the PPP loan] demand needed to support the ongoing operations of the [PPP Borrower]”). The FAQ specifically states that the assessment will be “based on the borrower’s overall situation through a multifactor analysis” and that the PPP borrower is required to have made the certifications “in good faith at the time of loan application, even if subsequent developments resulted in the loan being no longer needed ”. However, the FAQ further states that the SBA will consider the circumstances and actions of the PPP borrower before and after the application of that PPP borrower, as this will help the SBA to determine the validity of the legal certification of economic needs. at the time of the Application. The FAQ provides that the Questionnaire is not intended to indicate that the certification of a PPP Borrower is contested, but rather to assess whether that PPP Borrower had an adequate basis to perform such certification in good faith at the time of the request. demand.

Although it is suggested that the Questionnaire be used as a screening mechanism for PPP pardon requests, it appears that post-request circumstances will be taken into account in the assessment of the bona fide “need” certification. ‘a PPP Borrower. PPP borrowers with loans equal to or greater than the $ 2 million threshold should be prepared within 10 business days of submitting their PPP loan forgiveness request, not only to certify the information in the questionnaire, but to collect, review and ultimately produce all relevant documents. . In addition, these PPP Borrowers should be prepared for any follow-up requests from the SBA.