It appears that the Small Business Administration (SBA) will withdraw the questionnaires it issued, Form 3509 (For-Profit Borrowers) and Form 3510 (Non-Profit Borrowers), that were purportedly designed to enable the SBA to assess the propriety of a Paycheck Protection Program (PPP) borrower’s certification that “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.”
As we discussed in this article, the questionnaires sought information that was unrelated to the uncertainty a PPP borrower had at the time of the PPP loan application. This included questions about the borrower’s performance after receiving a PPP loan. We believed that it was improper for the SBA to gauge uncertainty at the time of the application based on what happened after the business received the PPP loan. Among other flaws, this ignores the very success of PPP loans and other COVID-related stimulus (which people could not have initially known).
We were not alone in our criticism, and as discussed in this article, the Associated General Contractors of America (AGC) filed suit to enjoin the SBA from using the questionnaires. The AGC has reported that, as part of the settlement discussions with the SBA, the AGC learned that the SBA will withdraw the questionnaires. The timing for this withdrawal is unclear, so stay tuned.
In the meantime, as we previously noted, it was never clear how the SBA would use the answers to the questionnaires. Moreover, we are not aware of the SBA denying loan forgiveness based on the answers in the questionnaires (and we are finally starting to see the SBA approve forgiveness for PPP loans over $2 million, where the borrower submitted the questionnaire). Still, PPP borrowers who have not yet been asked to prepare one of the forms (on a 10-day non-extendable timeline) will undoubtedly welcome their retraction.
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