The Associated General Contractors of America (AGCA) on June 23, 2021 published a statement[1] which indicated that the SBA will be withdrawing the “Loan Necessity Questionnaire” that applied to borrowers who had PPP loans of over $2 million.

Jeff Drew reported on the Journal of Accountancy website the following information after the Journal contacted the AGCA to follow-up on the short statement:

Asked via email for more details, Brian Turmail, the AGC’s vice president of Public Affairs & Strategic Initiatives, said that the group learned about the SBA’s plans from the U.S. Department of Justice, the federal agency with which the AGC is negotiating the possible termination of its lawsuit against the SBA.

“The Justice Department informed our lawyers that the SBA has already begun the process of withdrawing the questionnaire by submitting a formal request to OIRA [Office of Information and Regulatory Affairs],” Turmail said. “Once that is finalized, the SBA will make a formal announcement about the fact via updated frequently asked questions. Not sure what the timing will be on that, but the Justice Department officials made it quite clear that the form is being withdrawn.”[2]

The AGCA had filed suit[3] in December 2020 in the United States District Court for the District of Columbia to force the SBA to revise the forms (SBA Form 3509, Paycheck Protection Program Loan Necessity Questionnaire (For-Profit Borrowers), and SBA Form 3510, Paycheck Protection Program Loan Necessity Questionnaire (Non-Profit Borrowers)).  The AGCA article issued at the time the suit was filed described the basis of their challenge:

The complaint, which the association filed in the United States District Court for the District of Columbia, asserts that the process that produced the form, and the form itself, violate the Paperwork Reduction Act and the Administrative Procedures Act, and that the federal agencies failed to meet the minimum standards for due process. The association is requesting the court to declare that the questionnaire is arbitrary and capricious, and to declare that the SBA cannot lawfully use the information that the form generates to find a company ineligible for a PPP loan or deny a company’s application for forgiveness of its loan.

The association noted that the CARES Act (which established the PPP program) only required loan applicants to make a “good faith certification that the uncertainty of current economic conditions makes necessary the loan request….” Instead of asking borrowers how they concluded they faced such uncertainty when applying for their loans, the form attempts to set a means test, a revenue reduction test and a liquidity test that Congress never contemplated, and it focuses on later events that few companies could have predicted when applying.[4]

As this was written the SBA has not commented on any plans to withdraw the form.

[1] Glen Birnbaum, Twitter Post with an image of the statement, https://twitter.com/GlenBirnbaum/status/1408058801601888259, June 24, 2021 (retrieved June 28, 2021)

[2] Jeff Drew, “SBA may be dropping PPP Loan Necessity Questionnaire requirement,” Journal of Accountancy website, June 25, 2021 (retrieved June 28, 2021)

[3] Complaint for Declaratory and Injunctive Relief, Associated General Contractors of America, Inc. v. United States Small Business Administration and United States Office of Management and Budget, United States District Court for the District of Columbia, December 8, 2020, https://www.agc.org/sites/default/files/Files/Communications/AGC_vs_SBA.pdf (retrieved June 28, 2021)

[4] “Construction Trade Group Sues To Block Fed’s Unlawful Effort To Change Paycheck Protection Program (PPP) Rules,” Associated General Contractors of America website, December 8, 2020, https://www.agc.org/news/2020/12/08/construction-trade-group-sues-block-fed%E2%80%99s-unlawful-effort-change-paycheck-protecti-0 (retrieved June 28, 2021)