On Dec. 8, AGC filed suit against the Small Business Administration (SBA), seeking to compel the agency to restrict its use of the “Loan Necessity Questionnaire” now going out to all companies seeking forgiveness of Paycheck Protection Program (PPP) loans over $2 million – and ultimately, to compel SBA to revise the form itself. The details lie in the thirty-page complaint that AGC filed in the U.S. District Court for the District of Columbia.
AGC recognizes that SBA has every right and even an obligation to ensure that companies were eligible for the PPP loans they are now asking SBA to forgive. But AGC objects to SBA’s use of this particular form – and to any other effort the change standards for loan eligibility. After carefully reviewing the questionnaire, AGC concluded that the answers to its perplexing questions cannot begin to paint an accurate picture of the economic uncertainty that companies faced at the time they applied for their loans.
AGC is now pleased to report that its legal action quickly yielded results. On Dec. 9, SBA and the Treasury Department issued new guidance on the questionnaire. The new guidance confirms that “the statutorily required certification” of economic uncertainty and necessity did not have to meet any objective standard. Companies merely had to make that certification “in good faith at the time of [the] loan application.” While the new guidance does not expressly disavow any intention change the rules in the middle of the game, it similarly states that SBA will examine each company’s “individual circumstances” as they existed “at the time of the loan application, even if subsequent developments resulted the loan no longer being necessary.”
And on Dec. 10, after weeks if not months of insisting that it had to keep the questionnaire secret, SBA officially released form, posting a copy on the agency’s web site.
At this point, AGC continues to press the agency to reopen and extend the period for public comment on the questionnaire. AGC does not want to disrupt or delay the agency’s review of any applications that it is otherwise inclined to grant, but ultimately, AGC does hope to persuade the agency to make significant changes to the form – and AGC intends to pursue its lawsuit in the absence of any assurance that the agency will do just that.