Federal officials evaluating 'good faith'Justin Henry, BridgeTower Media Newswires of high-loan PPP borrowers with new form

Justin Henry, BridgeTower Media Newswires

Borrowers of the federal Paycheck Protection Program who took loans of $2 million or greater can expect to receive a form from lenders on which they will be required to attest their funds were necessary to sustain the operations of their business during the pandemic, according to an update from the Small Business Administration in early November.

Launched in early April and concluded in August, the Paycheck Protection Program (PPP), established under the CARES Act, provided loans for businesses to retain employees and pay for certain overhead costs. In its current form, the program allows borrowers to be fully forgiven if they use at least 60% of the loan on payroll expenses.

The PPP has provided 5.2 million loans worth a total of $525 billion to businesses and sustained more than 51 million U.S. jobs, according to a statement released by Treasury Secretary Steven Mnuchin in October.

SBA loan reviewers will use questionnaires — distributed to lenders to be given to borrowers in the coming days — to collect “supplemental information” to evaluate the good-faith certification that borrowers made on their PPP Borrower Application, according to the forms, which have been reviewed by Central Penn Business Journal.

Information solicited by the forms includes the borrower’s gross revenue in the second quarter of 2020 compared to previous quarters and details of how borrowers altered their operations since President Trump’s March 13 disaster declaration.

The SBA is requiring separate questionnaires of for-profit and nonprofit employers — Form 3509 versus Form 3510 — with the questionnaire for nonprofits requesting information related to endowment income and specific nonprofit entities like education and health facilities. The forms state that they must be completed and returned to the lender servicing the PPP loan within 10 days of receiving it from the lender.

The reason SBA reviewers will give special scrutiny to loans of $2 million or greater is to “maximize program integrity and protect taxpayer resources,” according to the forms.

“The information collected will be used to inform SBA’s review of your good-faith certification that economic uncertainty made your loan request necessary to support your ongoing operations,” the forms state. “Receipt of this form does not mean that SBA is challenging that certification. After this form is submitted, SBA may request additional information, if necessary, to complete the review. SBA’s determination will be based on the totality of your circumstances.”

Failure to complete the questionnaire could result in the SBA’s determination that the borrower was ineligible for either the PPP loan or any forgiveness amount claimed, forms state.