UPDATE: The SBA has officially dropped the PPP Loan Necessity Questionnaire from the forgiveness process. Read the updated article.

There are recent reports that the Small Business Administration intends to withdraw the use of a controversial Paycheck Protection Program loan questionnaire ( SBA Form 3509, Paycheck Protection Program Loan Necessity Questionnaire (For-Profit Borrowers), and SBA Form 3510, Paycheck Protection Program Loan Necessity Questionnaire (Non-Profit Borrowers).

The “loan necessity questionnaire” that was rolled out in November focused on the “good faith” certification that businesses had to make when applying for a PPP loan of $2 million or more, but it asked for significant documentation about how businesses subsequently did after receiving the loan, among other things. The Associated General Contractors (AGC) of America had sued the SBA, saying the questionnaire was developed in secret and without public input.

After weeks of negotiation, the SBA has told AGC it intends to withdraw the use of the questionnaire, pending an interagency process, and the organization has already seen many of the larger loans held by its members forgiven, according to AGC General Counsel Michael Kennedy. The organization had nearly 500 members with loans larger than $2 million, and up until recently, only around two dozen had gotten through the forgiveness process.

The timing of the official withdrawal of the Loan Necessity Questionnaire is unknown, but at least one SBA district (SBA’s West Virginia District Office) said, “We have received information that BSA Form 3509, Loan Necessity Questionnaire, is no longer required.”

The SBA has declined to officially comment.

Tony LaNasa, CPA, CFE

Tony LaNasa, CPA, CFE Principal lanasa@hwco.com