The Small Business Administration (SBA) issued two loan necessity questionnaires for Paycheck Protection Program (PPP) borrowers, together with their affiliates, with loans of $2 million or more. The questionnaires will be used to evaluate the good-faith certification of economic need for PPP loans, and two separate forms have been issued for for-profit and non-profit borrowers.

Copies of the forms are available below:

These forms are not currently available on the SBA’s website, however, they have begun issuing them to lenders for distribution. Once the form is issued, PPP loan borrowers are required to complete the form and submit it back to the lender, along with their required supporting documents, within 10 business days of receipt.

Supporting Documentation

Based on our review of the forms, required supporting documentation includes:

  • Gross revenue or gross receipts in the second calendar quarter (Q2) of 2020
  • Gross revenue or gross receipts in Q2 of 2019 (if the borrower existed then). If the borrower did not exist in Q2 of 2019, borrowers should provide gross revenue or gross receipts in the first calendar quarter (Q1) of 2020.
  • Amount of cash and cash equivalents the borrower owned as of the last day of the calendar quarter immediately before the date of the borrower’s PPP loan application.
  • Total amount of any pre-paid debt (i.e., paid before contractually due) made by the borrower between March 13, 2020, and the end of the loan forgiveness covered period of the PPP loan.
  • Total amount compensation during the loan forgiveness covered period of all those borrower’s employees compensated at $250,000 or more annually.

For for-profit borrowers, additional supporting documentation includes:

  • Total amount of any dividends or other capital distributions (other than for pass-through estimated tax payments) the borrower paid to its owners between March 13, 2020, and the end of the loan forgiveness covered period of the PPP loan.
  • Total amount compensation during the loan forgiveness covered period of all those borrower’s owners (who work at borrower and are compensated by borrower) compensated at $250,000 or more annually.

For non-profit borrowers, additional supporting documentation includes:

  • Gross receipts from gifts, grants, contributions and similar amounts in the Q2 of 2020. If the non-profit existed in Q2 of 2019, they must also provide gross receipts from gifts, grants, contributions and similar amounts. If they did not exist then, they must provide gross receipts of the same information from Q1 of 2020.
  • Expenses in Q2 of 2020. If the borrower existed in Q2 of 2019, they must also provide expenses for that time period. If did not exist in Q2 of 2019, they must provide expenses from Q1 of 2020.
  • Types of endowment funds (including donor-restricted endowments, quasi-endowments or similar), if any, and value of the assets held in each endowment as of the last day of the calendar quarter immediately before the date of the borrower’s PPP loan application.

Failure to complete the form and its required supporting documents may result in the borrower being made ineligible for either the PPP loan, the PPP loan amount or any loan forgiveness.

Borrowers who meet the $2 million threshold should consider preparing for these requests now to ensure they meet the form submission deadline. To obtain assistance, contact Doeren Mayhew’s dedicated advisory group today.