Article by: Jeff Skolnick, CPA, M.S. Taxation

The SBA has developed two forms relating to the Payroll Protection Program (PPP). The forms are loan necessity questionnaires created to ascertain whether borrowers that received $2 million or more of PPP funds actually had a need for the funds.

The Forms are Form 3509, which pertains to For-Profit Borrowers that borrowed $2 million or greater and Form 3510 which pertains to Not-for-Profits that borrowed $2 million or greater.

To be specific, each form begins with the following statement. “The purpose of this form is to facilitate the collection of supplemental information that will be used by SBA loan reviewers to evaluate the good-faith certification that you made on your PPP Borrower Application that economic uncertainty made the loan request necessary”.

The Form is due to your lender within ten business days of receiving the Form from your lender.

The For-Profit Form (3509) compares revenues from the second quarter of 2020 to the second quarter of 2019, or if the business did not exist in 2019, to the revenues of the first quarter of 2020. Additional questions inquire about whether your business was ordered to shut down, whether the borrower had to significantly alter its operations, whether a business voluntarily ceased, whether there were any capital improvements, cash on hand at the onset of the pandemic, whether any debt was paid down, were there payments for dividends or capital distributions, were there payments of compensation of more than $250,000 to an individual (annualized over the covered period of the loan) and were funds received from any other CARES Act program beside PPP. There are also questions pertaining to publicly held entities.

The Not-for-profit form (3510) is similar to the for-profit Form. This Form beside comparing revenue to periods inquires also compares expenses from the second quarter of 2020 to the second quarter of 2019, or if the business did not exist in 2019, to the revenues of the first quarter of 2020. The remaining items pertain to  whether your business was ordered to shut down, whether the borrower had to significantly alter its operations, whether a business voluntarily ceased, whether there were any capital improvements, cash on hand at the onset of the pandemic, whether any debt was paid down, were there payments of compensation of more than $250,000 to an individual (annualized over the covered period of the loan), and were funds received from any other CARES Act program beside PPP.

This is a summary of the forms and while I cover the major items, if your company borrowed $2,000,000 or more through PPP, then you should consult with a tax professional to make sure your properly file these forms.

Keep in mind. These forms only pertain to entities (for-profit or not-for-profit) that borrowed $2 million or more form PPP.

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Hang in there and stay safe,

Jeff Skolnick, CPA, M.S. Taxation