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PPP Loan News and Updates

PPP Loan News and Updates

December 14, 2020
By Tonneson
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Stimulus talks have started up again with Treasury Secretary Steven Mnuchin, supported by Senate Majority Leader, Mitch McConnell and House Republican Leader, Kevin McCarthy, offering a $916 billion proposal to Congress. Mnuchin discussed the proposed plan with House Speaker Nancy Pelosi last week. Unfortunately, there is no new commentary on the allowed deductibility of the Paycheck Protection Program (PPP) expenses that are forgiven despite the repeated urging from the American Institute of Certified Public Accounts (AICPA) to pass a separate bill with this provision and others included that are already agreed on by both the House and the Senate.

It is our understanding that the existing proposals all still have the deductibility of the PPP loan expenses in the text, so it may just be a matter of getting a Bill agreed upon and passed before year end. We will continue to watch for more news on this important issue.

On December 9, the Small Business Administration (SBA) issued PPP Loan FAQ #53. This new FAQ simply memorializes the statements the SBA has made regarding the recent PPP Questionnaire that borrowers may have seen from their lenders if their loan was $2M or more. FAQ #53 has been included below in its entirety for your review. In addition, the Questionnaires (Forms 3509 and 3510 ) are now available on the SBA website for reference with a new expiration date of 12/31/2020:

FAQ #53. Question: Why are some PPP borrowers receiving a Loan Necessity Questionnaire (SBA Form 3509 or 3510)?

Answer:
As previously announced, SBA is reviewing all loans of $2 million or more, and other loans as appropriate, for eligibility, fraud or abuse, and compliance with loan forgiveness requirements. As part of this process, SBA is providing a Loan Necessity Questionnaire to lenders for them to provide to PPP borrowers that, together with their affiliates, received loans of $2 million or more. Upon request from their lender,  orrowers should return the completed questionnaire to their lender within 10 business days of receipt.

The information that borrowers provide on the questionnaire will help SBA assess those borrowers’ certification in their loan application that “current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant,” as required by the  CARES Act.

A request to complete the Loan Necessity Questionnaire does not mean that SBA is challenging a borrower’s certification that is required by the CARES Act. SBA’s assessment of a borrower’s certification will be based on the totality of the borrower’s circumstances through a multi-factor analysis. As described in FAQ #46, SBA will assess whether the borrower had adequate basis for making the required good-faith certification, based on its individual circumstances in light of the language of the certification and SBA guidance. This certification is required to have been made in good faith at the time of the loan application, even if subsequent developments resulted in the loan no longer being necessary. In its review, SBA may take into account the borrower’s circumstances and actions both before and after the borrower’s certification to the extent that doing so will assist SBA in determining whether the borrower made the statutorily required certification in good faith at the time of its loan application.

After a borrower submits its completed questionnaire, SBA may request additional information, if necessary, to complete its review. When additional information is requested, borrowers will have an opportunity to provide a narrative response to SBA explaining the circumstances that provided the basis for their good-faith loan necessity certification. SBA will make a final determination that a borrower lacked an adequate basis for its loan necessity certification after reviewing any additional information that a borrower chooses to submit. This targeted, multi-step approach will ensure the integrity of the evaluation process and expeditious processing, as well as properly allocate SBA’s finite resources to those loans that require additional review.

Should you have any questions, please don’t hesitate to reach out to your tonneson + co representative.