The Journal of Accountancy reported that the SBA informed lenders in a July 9 letter that it will no longer request the completion of a loan necessity questionnaire for borrowers with PPP loans of more than $2 million and will not perform an additional necessity review.[1]

The article states:

In a notice sent July 9, the SBA said it would no longer request either version of the Loan Necessity Questionnaire: SBA Form 3509 for for-profit borrowers and SBA Form 3510 for not-for-profit borrowers. In addition, Loan Necessity Questionnaires previously requested by the SBA are no longer required to be submitted.

For PPP loans with an open request for additional information related to the Loan Necessity Questionnaire, the SBA advised lenders to close the request in the PPP computer platform and submit the loan back to the SBA.

The changes are effective immediately, but the SBA said it would release an FAQ shortly with more details.[2]

We reported on June 28 on a statement from the Associated General Contractors of America stating that the questionnaires would be withdrawn to settle a lawsuit the AGCA had brought on the matter late in 2020.[3]

Although the Journal of Accountancy article did not contain a link to a copy of the letter in question, a similar report was found in an article on Inc.’s website.[4]

While it appears the SBA has “given up” on attempting to determine the necessity of the loan at this point before the initial grant of forgiveness, they could still review particular loans at a later time.  Thus, the promised revised FAQ may give affected borrowers more information on what plans the agency might have to attempt to review the issue at a later date.

[1] Jeff Drew, “SBA officially drops PPP Loan Necessity Questionnaire requirement,” Journal of Accountancy website, July 12, 2021, https://www.journalofaccountancy.com/news/2021/jul/sba-drops-ppp-loan-necessity-questionnaire-requirement.html (retrieved July 13, 2021)

[2] Jeff Drew, “SBA officially drops PPP Loan Necessity Questionnaire requirement,” Journal of Accountancy website, July 12, 2021

[3] Edward Zollars, “SBA Reported to Be Withdrawing Loan Necessity Questionnaires for PPP Loan Program,” Current Federal Tax Developments website, June 28, 2021, https://www.currentfederaltaxdevelopments.com/blog/2021/6/28/sba-reported-to-be-withdrawing-loan-necessity-questionnaires-for-ppp-loan-program (retrieved July 13, 2021)

[4] Diana Ranson, “SBA to Drop Its Review of PPP Loans of $2 Million and Above,” Inc. website, July 9, 2021, https://www.inc.com/diana-ransom/small-business-administration-ppp-loan-necessity-questionnaire.html (retrieved July 13, 2021)