The Small Business Administration (SBA) is reportedly planning to drop the requirement for Paycheck Protection Program (PPP) borrowers with loans of $2 million or greater to submit a Loan Necessity Questionnaire when applying for loan forgiveness.
The SBA first introduced the Loan Necessity Questionnaire via a notice it issued last October, saying that it intended to use the information as part of its review process to assess borrowers’ good-faith certification of their economic need at the time of the loan application. Many borrowers were concerned that the information from the Loan Necessity Questionnaire would potentially be used to punish a company for taking a PPP loan at a time when circumstances seemed very dire, only to realize months later that things did not turn out as badly as they feared.
In December 2020, the Associated General Contractors of America (AGC) filed a lawsuit challenging the legality of the Loan Necessity Questionnaire. The two parties have been negotiating to settle the lawsuit for several weeks. Then, in a June 23, 2021 statement, AGC CEO Stephen Sandherr said the AGC had learned during the course of negotiations that the SBA intends to completely withdraw the Loan Necessity Questionnaire.
While the SBA has yet to issue any formal announcement about the change, the news from AGC seems encouraging and will surely be of interest to large PPP borrowers who have yet to receive loan forgiveness. We will continue to monitor the situation and provide an update as it becomes available.
As always, if you have any questions or would like assistance as you navigate the PPP loan forgiveness process, please contact your Kreischer Miller relationship professional or any member of our team. For additional news and resources, visit our COVID-19 Resource Center here.
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