July 13, 2021
Hot Topic Tuesday- The SBA Drops the PPP Loan Necessity Questionnaire for Loans $2million+
On July 9th, the SBA informed lenders that they were no longer going to request both versions (Form 3509 for for-profit borrowers and Form 3510 for not-for-profit borrowers) of the Loan Necessity Questionnaire for PPP loans worth $2 million or more. They also will no longer require previously requested Loan Necessity Questionnaires to be submitted. These changes are effective immediately, and the SBA plans on releasing an FAQ with more details soon.
The Associated General Contractors of America (AGC) filed a lawsuit against the SBA in December 2020 challenging the legality of the questionnaire. The types and the time frame of information requested by the SBA in the questionnaire were questioned because it did not reflect Congress’s intent for the PPP program.
After weeks of negotiations, the SBA started the process of removing the Loan Necessity Questionnaire requirement from the forgiveness applications for PPP loans $2 million or more in June by submitting a request to the Office of Information and Regulatory Affairs.
The removal of the questionnaire will speed up the forgiveness process for round one PPP loans. The extra paperwork created by the LNQ negatively impacted borrowers and lenders and inhibited the SBA’s ability to process loan forgiveness applications. This will benefit any round one PPP borrowers who still have not applied for forgiveness.
Although the additional information from the LNQ is no longer required, it is still recommended that lenders and borrowers keep financial documentation and information to make the forgiveness process as easy as possible for all parties.