New SBA Questionnaire Raises Stakes For Businesses That Have Borrowed Over $ 2 Million In P3 Loans | Fisher phillips
The Small Business Administration (SBA) has issued Loan Needs Questionnaires that lenders must send to more than 50,000 borrowers who have received $ 2 million or more in Paycheck Protection Program (PPP) funds – and questions indicate that borrowers may face a bigger hurdle than originally. expected in forgiveness. Businesses may need to demonstrate that they have suffered real economic harm resulting from the pandemic in order to be eligible for a full pardon, which is a change from what many initially believed at the time the claims were submitted. Borrowers only have 10 days from the time they receive the questionnaire to complete it and submit the supporting documents, so those who have received $ 2 million or more from the PPP should start preparing to take the questionnaire now. .
Many PPP borrowers know the famous FAQ # 31, released by the SBA in May, which said a borrower should carefully consider the needs certification required when applying for PPP funds. It also set a deadline for borrowers to return PPP funds without asking questions. The SBA then specified that it would consider that any borrower, as well as its subsidiaries, having received PPP loans of less than 2 million dollars, would have made the certification of the needs “in good faith”. But the government has not provided additional guidance to borrowers with loans over $ 2 million on how they can meet the certification needs.
Now, as many borrowers prepare for their loan forgiveness requests, the SBA has apparently determined the criteria for determining whether borrowers with loans over $ 2 million meet the needs certification. The questionnaire forms appear to be the SBA’s attempt to gather the information it deems necessary to determine whether the requirements certification was made in good faith.
Why should you take note of the questionnaire?
When applicants applied for a PPP loan, it was sufficient for them to certify that “the uncertainty of current economic conditions makes the loan application necessary to support the ongoing operations of the eligible beneficiary”. However, the information requested in the questionnaire suggests that the SBA will require borrowers real economic damage caused by the pandemic.
This is a stark contrast to the original demand, which only required a possible detrimental economic impact. It appears that the SBA seeks to ignore the common adage “hindsight is always worth 20/20” and may hold borrowers accountable for the lack of economic harm – even if, at the time of the application, economic harm was an issue. strong possibility.
What information is requested?
The questionnaire asks for supporting documents and information such as the gross turnover for the 2nd quarter of 2020 compared to the 2nd quarter of 2019 and the amount of cash available. The questionnaire also seeks information on the amount of any endowment funds, a clear sign that schools may be a target of the questionnaire. Borrowers also have the option of providing additional information they deem relevant for certification of the requirement.
Who does it affect?
According to the opinion published in the Federal Register, the SBA estimates that approximately 42,000 for-profit borrowers and approximately 10,000 non-profit borrowers will receive the questionnaire. The SBA provides the questionnaires to lenders to distribute to any borrower, as well as its affiliates, with PPP loans over $ 2 million.
The questionnaire states that it must be completed and submitted to the lender “within ten business days of receipt from your lender” and that failure to submit the form and supporting documents could result in “the SBA’s determination that you were not eligible for the PPP loan, the PPP loan amount, or any rebate amount claimed, and the SBA may seek repayment of the loan or exercise other available remedies. ”
Obviously, the questionnaire could have a significant impact on the ability of borrowers to request forgiveness of their PPP loan. Therefore, borrowers who have received a loan of $ 2 million or more should start collecting supporting documents and should consult a lawyer for assistance in preparing the response to ensure that you are in. the best position to get full loan forgiveness.