PPP LOANS TOTALING $2 MILLION OR MORE REQUIRE ADDITIONAL DISCLOSURE
The SBA has recently proposed guidance for entities receiving Paycheck Protection Program (PPP) loans equaling $2 million or more. The proposed questionnaires, SBA Form 3509 (for-profit) and Form 3510 (not-for-profit), state their purpose is to “facilitate the collection of supplemental information that will be used by SBA loan reviewers to evaluate the good-faith certification borrowers made on their loan application.”
The decision to review circumstances of larger loan recipients was not wholly unexpected as the SBA has faced scrutiny for extending program availability to larger businesses. An economic uncertainty certification was required from entities when they submitted their PPP loan applications. The SBA later released guidance stating that all PPP loans with an original principal amount of $2 million or greater will be subject to review.
SBA Form 3509 and 3510 ask for-profit and not-for-profit entities borrowing $2 million or more to provide comprehensive explanations pertaining (but not limited) to:
- Gross revenue for 2nd Quarter 2020 compared to 2019
- The extent to which state and local shutdowns ceased or altered business operations
- Prepayment of outstanding debt
- Compensation of owners or employees making $250,000 or more annually
- Investment in capital improvement projects
- Access to other CARES Act programs
Loan recipients have ten business days from receipt of these forms to submit the requisite information to their banks. Should they fail to complete the form or provide adequate substantiation of their good-faith certification, the SBA may forgo loan forgiveness and instead seek full repayment.
Given the extensive compliance demanded by the SBA, it is important that business owners partner with their financial professional(s) to meet all requirements in a timely fashion. Should you have questions related to your PPP loan forgiveness or any other concerns specific to your situation, please contact us.