Small Business Administration Withdraws Loan Necessity Questionnaire
Since the Small Business Administration (SBA) sponsored the Paycheck Protection Program (PPP) in April 2020 and again in January 2021, businesses adversely affected by the pandemic received nearly $800 million in loans to help retain workers, maintain payroll, cover rent/mortgage and utility expenses, and more. The PPP expired on May 31, 2021, but some borrowers are currently applying for or waiting on loan forgiveness.
Loan Necessity Questionnaire
When turning in an application for the first round of PPP loans, borrowers requesting loans above $2 million were required to certify that the loans were necessary to support the operations of the business using one of the Loan Necessity Questionnaire (LNQ) forms. Borrowers of loans less than $2 million were not required to use the LNQ, but instead had to self-certify the need.
The purpose of the LNQ forms was to assist the SBA when reviewing PPP applications for fraud or abuse, eligibility, and compliance. However, the use of the LNQ created problems that ultimately affected the SBA’s ability to process loan forgiveness applications.
The SBA did not require LNQ forms in the Second Draw PPP application process.
Withdrawal of the Loan Necessity Questionnaire
On July 2, 2021, the SBA notified PPP lenders that they are no longer required to secure LNQ forms from borrowers seeking loan forgiveness of $2 million or more. This news benefits borrowers who have not yet secured loan forgiveness. Even though the SBA has withdrawn the LNQ, the SBA will still thoroughly review all documentation and the borrower’s circumstances and actions before and after the certification.
Help is available
PPP borrowers should keep all necessary documentation related to the loan and its forgiveness. The attorneys at O’Reilly Rancilio are available to assist business owners with questions. For information, call 586-726-1000 or visit our website.