On Thursday, December 9, 2020, the Small Business Administration (SBA) and the U.S. Department of the Treasury updated the Paycheck Protection Program (PPP) Loan FAQs regarding the recently imposed loan necessity questionnaires. FAQ 53 was released to address why some PPP borrowers are receiving a For-Profit and Non-Profit Loan Necessity Questionnaire (SBA Forms 3509 and 3510).
In general, the SBA forms assist in assessing and auditing PPP loans of $2 million or more. The information collection questionnaires recently received criticism from business groups and stakeholders stating that a retroactive necessity certification is burdensome and confusing.
FAQ 53 states that the SBA’s assessment of a borrower’s certification will be based on the totality of the borrower’s circumstances through a multi-factor analysis. The SBA will assess whether the borrower had an adequate basis to make the required good-faith certification, considering the intention of the SBA certification guidance. Although borrowers were required to make this certification in good faith at the time of the loan application, subsequent developments may have resulted in the loan no longer being necessary. The SBA may consider the borrower’s circumstances and actions before and after the borrower’s certification. This process will help the SBA determine whether the borrower made the statutorily required certification in good faith at the time of its loan application.
Tarlow is Here to Help – Please Contact Us with Questions
Tarlow Partners and staff members are closely monitoring guidance from the SBA, the Department of Treasury, Congress, and the IRS, as well as the PPP rules, tax-related legislation, and regulations. We are readily available to assist business owners and will continue to send updates about relevant news and changing guidelines. If you have any questions about this update or any tax and/or year-end planning matter, please contact your Tarlow advisor for assistance.