PPP Update #16 – Questionnaires for Loans Greater Than $2 Million

Posted on Fri, Nov 06, 2020 ©2021 Drucker & Scaccetti

PPP Stuff

As guidance in this area is being released regularly, we recommend you read all of our blogs on this subject.  All the blogs in the Paycheck Protection Program series are here: #1, #2#3#4#5#6#7,#8,#9,#10,#11,#12,#13, #14, #15#16#17, #18,

#19, #20, #21, #22, #23




Let us take a break from the election and get back to our favorite (read: most confusing) stimulus, the Paycheck Protection Program (PPP). Over the next week, we will provide various updates that occurred since our last PPP blog update. Today, we will focus on an update from last week that provides insight into how the Small Business Administration (SBA) will review PPP loans of $2 million or more. If your PPP loan is $2 million or more, this blog is for you.


On October 26, the SBA published a notice in the Federal Register seeking approval from the Office of Management and Budget (OMB) to collect information from PPP borrowers of $2 million or more via issuing two new forms:


  1. Form 3509 to be used by for-profit entities; and
  2. Form 3510 to be used by non-profit entities.


These DRAFT forms are not currently posted on the Treasury or SBA websites. We recommend you review these DRAFT forms only to gain an understanding of what might be expected as the final versions may differ. When/if final forms are published on the Treasury or SBA website(s), we will update this blog to link to the final forms.



In PPP Update #6, we discussed the now famous FAQ #31, which addressed the required certification that “current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” Upon issuance of this FAQ, confusion ensued (see PPP Updates #7 & #8) concluding with issuing FAQ #46. FAQ #46 put borrowers of $2 million or more on notice that the SBA would review the good faith certification but provided no details around what would be reviewed. With the issuance of the DRAFT Form(s) 3509 & 3510, the SBA has now provided some clarity on what will be reviewed.


Form(s) 3509 & 3510

Form(s) 3509 & 3510 are loan necessity questionnaires.


The forms are divided into two distinct sections:


  1. Business Activity/Non-Profit Activity Assessment – This covers metrics including 2020 second quarter (Q2) revenue compared to 2019, commencement of any new capital projects, mandatory shut-down orders and the impact on the business, and industry specific alterations caused by COVID-19 including the associated cash outlay to comply. The non-profit form (3510) also requests information on comparative Q2 expenses for 2020 & 2019.


  1. Liquidity Assessment – This covers information around available cash and cash equivalents, distributions to owners, prepayment of debt, compensation of employees and owners, value of shareholder’s equity on the books, participation in other CARES Act programs and information on who owns the entity including whether the company was publicly-traded. The non-profit form (3510) also requests information around restrictions on using net income and cash or cash equivalents to pay for PPP eligible expenses, whether or not an endowment fund exists, information around non-cash investments, and details around the type of non-profit


Both sections request supporting documentation, include a catchall question for the borrower to submit additional relevant information to support their case, and conclude with a certifications section that should be reviewed with legal counsel similar to the original loan application. The questionnaires also indicate they must be returned by the borrower within ten (10) business days of receipt from the lender.


Tax Warrior Perspective

While the questionnaires may appear intimidating, they also clearly indicate that receipt of the questionnaire does not indicate the SBA is challenging the certification made during the loan application or the borrower’s eligibility for loan forgiveness. Instead, the questionnaires are intended to gather data to assist the SBA in their decision-making process. However, the SBA continues to move the goal post on borrowers. The questionnaires are not limited to the borrower’s circumstances at the time of application consistent with the certification statement. Instead, several questions inquire about circumstances after receipt of the loan. This should come as a surprise to anyone following the PPP process since inception.


We anticipate all borrowers of $2 million or more will receive the questionnaire from their lender upon submitting their PPP forgiveness application. We recommend these borrowers review the questionnaire before your PPP loan forgiveness application submission as the ten (10) business day turnaround time is short given the length of the questionnaire and the anticipated time required to assemble the supporting documentation. We also recommend you consider how the catchall question at the end of each section can frame the case for your loan necessity in the most favorable light.


We will continue providing PPP updates when significant and relevant information becomes available.  If you have questions about how to navigate the PPP Forgiveness Application process, or how other CARES Act incentives may apply to your business, please call on us.  You can stay up to date on PPP guidance and tax issues relating to the coronavirus at our COVID-19 Tax Resource Center.



Topics: loan forgiveness, Paycheck Protection Program Loans, SBA, PPP guidance, Greater than $2 million, Form 3509, Form 3510

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