Earlier in 2020, the Small Business Administration (SBA) released loan necessity questionnaires for public comment for both For-Profit Borrowers (Form 3509) and Not-For-Profit Borrowers (Form 3510) with loans of $2 million or more. The public comment period ended November 25, 2020, but we have yet to see if the SBA will revise the content based upon the feedback received.
However, on December 9, 2020, the SBA released its latest round of FAQs. Notably added was FAQ #53, which specifically indicates that an SBA request to complete the questionnaire does not necessarily mean that the SBA is challenging the borrower’s good-faith certification that was required pursuant to Sec. 1102 of the CARES Act. Furthermore, the FAQ includes two important points:
- The SBA’s assessment of this certification will be based upon a given borrower’s given set of circumstances; and
- This certification is required to have been made in good faith at the time of the loan application, even if subsequent developments resulted in the loan no longer being necessary.
As a reminder, Sec. 1102 of the CARES Act required borrowers to certify “that the uncertainty of the current economic conditions makes necessary the loan request to support the ongoing operations of the eligible recipient.”
Sax will continue to update you as further details are made available. Reach out to your Sax advisor or email covid19@saxllp.com with questions. For more and on-going information relative to your state and business, visit Sax’s COVID-19 Resource Center.