The Small Business Administration Introduces New PPP Requirements Affecting Borrowers
On Monday, October 26, 2020, the Small Business Administration requested the Office of Management and Budget to approve information collection that would require each for-profit borrower that, together with its affiliates, received PPP loans with an original principal amount of $2 million or greater, to complete and submit Form 3509, along with supporting documents required in the form, to the lender servicing borrower’s PPP loan. It is expected that Borrowers would receive this request from their lender in connection with the loan forgiveness process. A borrower would be required to complete and submit the Form 3509 to their PPP loan lender within ten (10) business days of receipt of the form from their lender. The SBA would also be able to request additional information after the submission of the form.
The information would be used to evaluate a borrower’s good-faith certification that economic uncertainty made the loan request necessary to support such borrower’s ongoing operations, but the form states that receipt of Form 3509 by a borrower in and of itself does not mean that the SBA is challenging that certification. Form 3509 states that the “SBA’s determination will be based on the totality of your circumstances.”
Failure to complete the form and provide the required supporting documents may result in the SBA determining that the borrower was ineligible for the PPP loan, the amounts of such PPP loan, and/or any forgiveness of such loan, and the SBA may seek repayment of the loan or pursue other remedies.
Form 3509 asks for information about business activities of the borrower, including the borrower’s gross revenues for the second quarter of each of 2020 and 2019, whether the borrower was required by a state or local authority to shutdown due to COVID-19, and whether borrower was ordered to significantly alter its operations by a state or local authority due to COVID-19. Form 3509 also asks for information about the borrower’s liquidity, prepayment of debt, and payments to employees and owners.
A similar form for non-profit borrowers (Form 3510) can be found here.
If you have further questions, please contact Jeff Brandel.
About Davis Graham & Stubbs LLP
Davis Graham & Stubbs LLP, one of the Rocky Mountain region’s preeminent law firms, serves clients nationally and internationally, with a strong focus on corporate finance and governance, mergers and acquisitions, natural resources, environmental law, real estate, and complex litigation. Our lawyers have extensive experience working with companies in the energy, mining, technology, hospitality, private equity, manufacturing, asset management, and aviation industries. As the exclusive member firm in Colorado for Lex Mundi, the world’s leading network of independent law firms, DGS has access to in-depth experience in 100+ countries worldwide.