For-profit and non-profit borrowers of PPP loans of $2MM or more are now required to submit additional forms.

On October 26, 2020, the SBA published a notice seeking Office of Management and Budget (OMB) approval of new forms to be submitted by for-profit and non-profit borrowers of PPP loans of $2 million or greater with their forgiveness applications. The two forms, Form 3509 Loan Necessity Questionnaire (For-Profit Borrowers) and Form 3510 Loan Necessity Questionnaire (Non-Profit Borrowers) are not yet available on the SBA website (as OMB has not approved them), but drafts of the forms can be accessed here (Form 3509 and Form 3510). The instructions to the forms indicate that the respective form needs to be completed and submitted to the PPP Borrower’s lender within 10 business days of receipt from the lender. The form is required from all PPP Borrowers borrowing funds of $2 million or greater – even if they have already submitted their forgiveness application. Failure to compete the form could result in the SBA’s determination that a Borrower was ineligible for the PPP loan, the amount borrowed or any forgiveness amount claimed.

The forms contain questions about the impacts of COVID-19 on a Borrower’s business, including whether it was required to shut-down by a state or local authority, and if it altered its business because of COVID-19. In addition, the form asks questions about the Borrower’s liquidity position, including cash position at the end of the fiscal quarter before the PPP application was filed, distributions/debt payments made during the covered period and employees whose compensation exceeded $250,000 on an annual basis.

These questions get at issues that the CARES Act requirements do not cover. The CARES Act required only that “economic uncertainty” of a Borrower made the loan necessary – there was no requirement that a business actually be impacted by COVID-19. Further, note that the questionnaires cover matters about the Borrower’s situation after it received its loan – in other words, Borrowers are being asked to provide information that they did not know they would need to provide when they applied for the loan.