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Financial Services Law Insights and Observations

SBA explains discontinuation of loan necessity questionnaires

Federal Issues Covid-19 SBA CARES Act

Federal Issues

On July 29, the SBA added question #69 to its Paycheck Protection Program (PPP) frequently asked questions explaining why the agency is discontinuing the use of two Loan Necessity Questionnaires (SBA Form 3509 or 3510). Borrowers that received PPP loans of at least $2 million were required to complete the questionnaires to back up their good faith certification “that economic uncertainty made the loan request necessary to support ongoing operations.” However, SBA noted that following a notice and comment period, the majority of commentators objected to the questionnaires. Based on the results of completed loan reviews so far, the agency believes that “audit resources will be more efficiently deployed across all loans if the loan necessity questionnaire is discontinued.” The SBA noted that these reviews “are lengthy and have caused delays beyond the 90-day statutory timeline for forgiveness, thus negatively impacting those borrowers that made their loan necessity certification in good faith.”

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