AGC Announcement Raises Doubts on PPP Questionnaire: What Contractors Need to Know about Your PPP Forms
The Small Business Administration’s Paycheck Protection Program (PPP) Loan Necessity Questionnaire may soon be a thing of the past. Last fall the SBA began requiring commercial lenders to provide certain questionnaires to PPP borrowers that received loans of $2 million or more. The questionnaire was meant to help assess the veracity of a borrower’s certification that “[c]urrent economic uncertainty make this loan request necessary to support the ongoing operations of the Applicant.” The questionnaire was immediately controversial in that much of the requested information appeared to have little relevance to the assessment of a borrower’s good faith in making such certification.
In December 2020, the Associated General Contractors of America (AGC) filed a lawsuit challenging the questionnaires on multiple grounds. Last week the AGC announced that during negotiations to settle its lawsuit with the SBA, the AGC was informed that the SBA intends to withdraw the questionnaire. This news is important because commercial lenders generally have not requested borrowers provide these questionnaires until after loan forgiveness applications have been filed. Thus, borrowers in a position to delay forgiveness applications or the submission of the questionnaires may consider doing so until further information is available on this subject.
This move away from testing the veracity of borrower’s claims of need brings PPP loans more inline with consumer forbearance requests under the CARES Act. Mortgage lenders and servicers have been accepting mere attestation to financial hardship related to COVID-19 for a forbearance since the onset of the pandemic.