On October 26, 2020, the Small Business Administration (SBA) published a proposed Paycheck Protection Program (PPP) Loan Necessity Questionnaire for both for-profit and nonprofit borrowers in the Federal Register.^[1] This proposed questionnaire has been presented to the federal Office of Management and Budget for consideration, and it appears that there is an open comment period on the proposal until November 25, 2020.

As of the date of this article, it appears that PPP borrowers that received PPP loans with an original principal amount of $2 million or more would be required to complete this questionnaire. This questionnaire would be distributed by PPP lenders and must be returned, along with supporting materials, within 10 business days of receipt from the lender. According to the SBA, failure to timely return this information “may result in a determination that you were ineligible for either the PPP loan, the PPP loan amount, or any forgiveness amount claimed.”^[2]

The questionnaire requests details from borrowers regarding income, expenditures, capital improvements, NAICS code, liquidity, and affiliation for the time period preceding and during the PPP loan, with statements and supplementary documentation required. The questionnaire importantly requires a certification which, as with the underlying PPP application, exposes any signatory and borrower to legal liability, including potential fines and imprisonment, for false and fraudulent statements.

This new SBA questionnaire, as proposed, would function as an ex post facto supplementary application for PPP borrowers and should be considered with great attention to detail. Particularly because of the short turnaround time for form completion, PPP borrowers should consider taking time now to prepare for the possibility of immediate completion of this form once received from their lender. We will continue to monitor and report on the status of the SBA proposal.

[1] The for-profit questionnaire may be found here: https://www.saxllp.com/wp-content/uploads/Loan-Necessity-For-Profit-Businesses.pdf; the nonprofit questionnaire may be found here: https://www.saxllp.com/wp-content/uploads/Loan-Necessity-Non-Profit.pdf .

[2] SBA PAYCHECK PROTECTION PROGRAM LOAN NECESSITY QUESTIONNAIRE (FOR-PROFIT BORROWERS) at p. 1, https://www.saxllp.com/wp-content/uploads/Loan-Necessity-For-Profit-Businesses.pdf