As of July 12, 2021, the Small Business Administration (SBA) officially removed the loan necessity questionnaire from the Paycheck Protection Program (PPP) loan forgiveness application. Previously, borrowers seeking forgiveness for loan amounts exceeding $2 million were required to demonstrate need via a questionnaire about revenue, altered or reduced operations, and cash liquidity.

The change comes after the Associated General Contractors (AGC) filed a lawsuit against the SBA and Office of Management and Budget (OMB). Additionally, more than 80 organizations, including the American Institute of Certified Public Accountants (AICPA), signed a letter to Congress urging them to remove the questionnaire, as it conflicted with the spirit of the bill. Because businesses applied for PPP loans without knowing what the future held for closures and restrictions, many felt that requiring the loan necessity questionnaire as part of the forgiveness process violated the intent behind the relief.

For organizations with loans exceeding $2 million, the good-faith certification made during the original application will be sufficient to demonstrate need during the forgiveness process. Nonetheless, we recommend borrowers carefully track how COVID-19 closures and restrictions impacted revenue, operations, and cash liquidity.

Finally, note that if your business is subject to Federal Acquisition Regulation (FAR) compliance requirements, we outlined critical business implications to consider while navigating forgiveness.

The entire Aldrich team is monitoring the PPP updates and guidance released from the SBA closely. We’ll be updating our PPP Resource Center to keep you apprised of changes as they happen. If you have any questions about the PPP loan forgiveness application, reach out to your Aldrich Advisor.

This article was written with the most current information as of July 15, 2021.