Last week, the Small Business Administration began touting “necessity for credit.” questionnaires caters to borrowers who have taken out $2 million or more in forgivable loans under the Paycheck Protection Program.
The questionnaires are designed to help the SBA evaluate a borrower’s good faith certification that their loan application was necessary to support ongoing operations. Borrowers who receive the questionnaire from their lenders are asked to return the questionnaire within 10 business days. If a borrower fails to complete the questionnaire, or if the SBA determines that the borrower did not have a good faith basis to certify that his loan application was necessary to support his ongoing operations, the borrower’s application for forgiveness of the PPP loan may be denied.
Some banks have lamented the questionnaires, fearing that the program’s changing rules and expectations since its hasty launch in April could complicate businesses that have taken advantage of the aid, one said items in politics.
The new questions for companies in the nine-page questionnaire ask for details on quarterly revenue, capital expenditures, dividend payments, and whether employees have earned more than $250,000.
As before with the PPP, some accountants recommend that lenders take a more cautious “wait and see” approach when completing this questionnaire, although it is ultimately the borrower who must make the call. Many believe more guidance will come from the SBA.
“Following the release of the final questionnaire, we suggest that borrowers review the questions asked, discuss them with their bank advisor, and gather documentation and evidence of the thought process used in applying for the loan based on the facts and circumstances existing at the time . ” said Dawn MinotasDirector of Outsourced Managed Services at Marcum.