Client Alert- Seeking Forgiveness for PPP Loans Over $2MM

Nov 12, 2020
  • FisherBroyles News

As many of our clients know, the Paycheck Protection Program (“PPP” or the “Program”) created under the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), has provided upwards of $670 billion in loans for qualifying small businesses to help cover their costs associated with payroll, benefits, interest, rent and utilities during the COVID-19 Pandemic.  The loans were generally obtained under the premise that they would be forgiven under the Program and would be converted into tax-free grants. While we are all waiting for Congress to take additional action on COVID relief, this alert addresses some new developments about the PPP affecting certain borrowers.

In an effort to facilitate the forgiveness process, earlier this month the Small Business Administration (the “SBA”) released the following forms to help  gather supporting information for borrower’s forgiveness applications: SBA Form 3509Paycheck Protection Program Loan Necessity Questionnaire (For-Profit Borrowers), and SBA Form 3510Paycheck Protection Program Loan Necessity Questionnaire (Non-Profit Borrowers)(the “Questionnaires”). These Questionnaires are designed for for-profit and not-for-profit businesses that received $2 million or more in PPP loans.  These borrowing businesses must complete one of these two Questionnaires being sent to lenders by the SBA for distribution to borrowers.  The issuance of these Questionnaires will affect approximately 30,000 of the 5.2 million PPP loan applications that were filed according to SBA reporting.

These Questionnaires are designed to gather additional information, as part of the loan forgiveness process, for SBA loan reviewers to evaluate the good-faith certification borrowers made on their initial PPP loan applications that economic uncertainty made their specific loan request necessary.

Lenders will not be required to verify or further validate any borrower’s responses or supporting documents on these Questionnaires. The SBA is anticipated to release more guidance related to Form 3509 and Form 3510 in the coming weeks. Each of the Questionnaires include twenty-one (21) questions.  Many of these questions have multiple parts and supporting documentation is required for six (6) questions. The Questionnaire must be completed and returned with supporting documentation to the lender within ten (10) business days of receipt of written notification from the lender containing the Questionnaire. Failure to do so may result in either (1) the SBA’s determination that the borrower was ineligible for the loan (or forgiveness of all or part of the loan),  (2) the SBA seeking repayment of the loan,  or (3) the SBA pursuing other available remedies.

If you borrowed $2 million or more in PPP loans, receipt of either Questionnaire is NOT an indication of the SBA challenging your eligibility for a PPP loan. Rather, as stated above these Questionnaires are intended to facilitate SBA’s collection of all information that will help evaluate the good-faith certification made by borrowers that economic uncertainty made the loan request necessary. Once the Questionnaire is submitted, the SBA may request additional information as necessary, and the final determination will be made taking into account all of the borrower’s circumstances.

At FisherBroyles, we are closely monitoring this very fluid situation.  Please continue to check for subsequent alerts on our FB News Site, as well as the information being disseminated on both the SBA’s informational site and the Treasury’s PPP Page.   We also strongly encourage borrowers to continually check with PPP lenders to see when they intend to start accepting Forgiveness Applications and what processes they are likely to put in place to do so.


For additional information, please contact any of the following with any questions or more specific situations:

Paul Economon, Partner, [email protected]  

Kevin Gluntz, Partner, [email protected]

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