Caution on PPP loan questionnaires

      Contracting attorneys are warning clients about potential risks from filling out new questionnaires for borrowers who received Paycheck Protection Program loans over $2 million.

      The risks pertain to Form 3509 and Form 3510, recently announced by the SBA. Borrowers have 10 days to respond or face penalties.

      “According to the SBA, the purpose of these Forms is to evaluate a borrower’s good-faith certification on their economic need, but in actuality, these Forms attempt to retroactively modify PPP regulations and punish borrowers for not previously abiding by these new requirements,” Isaias “Cy” Alba, partner with PilieroMazza Pllc, wrote in a client alert on Oct. 30.

      “It is our assessment that SBA’s intention is to deny loan forgiveness to businesses that were not negatively impacted by the coronavirus pandemic (COVID19),” Alba added.

      The forms ask if borrowers were ordered to shut down or to significantly change operations due to COVID19.

      “These types of questions seem to be aimed at denying loan forgiveness by demonstrating that borrowers have not been negatively impacted by COVID-19, even though no borrower could have known the impact that COVID-19 would have on them when they first submitted their loan application,” Alba wrote.

      The National Law Review also raised issues: “The SBA’s inquiry into a PPP borrower’s economic circumstance after receiving the PPP Loans is a new and surprising development. However, the SBA has not clarified how the information provided on Form 3509 will be evaluated, or under what circumstances the SBA will deny forgiveness.”

      SBA officials were not immediately available.

More Information:
PillieroMazza’s client alert: https://bit.ly/3nV8zM6
National Law Review article: https://bit.ly/2KCr49D

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