The Small Business Administration has provided more clarity on the information requested of some PPP loan borrowers in a Loan Necessity Questionnaire.
The SBA released this month PPP FAQ 53, which clarifies that the information provided on the questionnaire will help the SBA assess whether PPP loan borrowers’ certification – as required by the CARES Act – was based on the economic uncertainty at the time that made the loan request necessary to support ongoing business operations of the applicant.
The SBA will make this assessment “based on the totality of the borrower’s circumstances through a multi-factor analysis,” the FAQ states. This includes assessing whether the borrower had an adequate need for the PPP loan at the time of the application, “even if subsequent developments resulted in the loan no longer being necessary,” the SBA states.
In other words, in making its assessment of need, the SBA may take into account the borrower’s circumstances and actions “both before and after the borrower’s certification.”
The SBA states it may ask for more information even after the completed questionnaire is submitted to the lender. The borrower will be able to provide a “narrative response to the SBA explaining the circumstances that provided the basis for their good-faith loan necessity certification.”
We will continue to monitor the guidance on PPP loan forgiveness as it is released and keep you informed. In the meantime, if you have any questions about the forgiveness process, including loan necessity questionnaires, please contact us.