On October 26, 2020, the United States Small Business Administration (SBA) posted a notice in the Federal Registry regarding the SBA’s intention to release two new forms regarding the Paycheck Protection Program (“PPP”) and PPP loan forgiveness issues. Notice is available here.
For clarity, it should be noted that the forms have not yet been approved or issued by the SBA, and the proposed forms remain subject to a thirty-day public comment period. Accordingly, the summary below remains subject to change pending final approval and publication of the forms.
In the notice, the SBA announced that it is seeking approval from the Office of Management and Budget (OMB) to publish two forms, Form 3509 for for-profit businesses and Form 3510 for for-profit entities. non-profit. These forms will serve as loan necessity questionnaires to collect information in order to assess the borrower’s certification in economic matters (remember that all PPP borrowers were required to certify that the economic uncertainty at the time of the PPP loan application made the borrower’s loan application necessary to support its operations).
If approved as a project, it looks like lenders will send the applicable form to any borrower who has received a PPP loan of at least $ 2,000,000 after the borrower submits a loan cancellation request. . The borrower will then have 10 days to complete the questionnaire and provide the supporting documents to the lender.
The majority of the elements of the draft forms are used to collect information on the business activity and liquidity of the borrower at the time of the PPP loan application. A non-exhaustive list of the information requested follows below. But remember, forms are subject to comment and final approval.
Business activity assessment
- Gross income of the borrower for the second quarters of 2020 and 2019 (note that a different period may apply for seasonal borrowers)
- If the borrower has been ordered to close by a state or local authority due to COVID-19 since March 13, 2020
- If the borrower has been ordered to significantly modify their operations by a state or local authority due to COVID-19 since March 13, 2020
- If the borrower has voluntarily ceased or reduced operations due to COVID-19 since March 13, 2020
- If the borrower has started new non-COVID-19 capital improvement projects during the period beginning March 13, 2020 and ending at the end of the period covered
- The borrower’s cash and cash equivalents as of the last day of the calendar quarter immediately preceding the date of the borrower’s PPP loan application
- If the borrower paid dividends or other cash distributions (other than estimated tax payments) between March 13, 2020 and the end of the period covered
- If the borrower has prepaid any outstanding debt between March 13, 2020 and the end of the period covered
- During the Covered Period, if an employee received compensation greater than $ 250,000 on an annualized basis
- If the borrower received funds from another CARES Act program