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Janover Shares Recent Developments on PPP Loans Greater Than $2 Million

This week, the SBA issued a notice seeking approval from the Office of Management and Budget to require the issuance of a “loan necessity questionnaire” for loans exceeding $2 million (guidance seems to indicate that the $2 million includes all affiliated groups).

The SBA Form 3509 – Loan Necessity Questionnaire, requires that the borrower provide additional information to support the certification of “economic uncertainty” at the time of the PPP loan application process. Please keep in mind, that there is a 30-day comment period on this notice, so it appears nothing is “final” at this point in time, but you can use this to get an idea of what may be required so that you can start to plan accordingly.

(Click here to access the SBA Form 3509 – Loan Necessity Questionnaire.)

The questionnaire asks for data to support business activity and liquidity assessments which includes items such as:

  • Gross revenue in Q2 of 2019 and 2020
  • Expenses in Q2 of 2019 and 2020
  • If the borrower has been ordered to shut down by a state or local authority due to COVID-19
  • If the borrower has been ordered to significantly alter its operations by a state or local authority due to COVID-19
  • If the borrower voluntarily ceased or reduced its operations due to COVID-19
  • If the borrower began any new capital improvement projects not due to COVID-19
  • Borrower’s cash and cash equivalents as of the end of the last calendar quarter prior to the PPP loan application
  • If the borrower paid any dividend or other capital distributions (in excess of distributions to pay taxes) prior to the end of the Covered Period
  • If the borrower prepaid any outstanding debt prior to the end of its Covered Period
  • If any employees received compensation in excess of $250,000 on an annualized basis during its Covered Period
  • If any owners received compensation in excess of $250,000 on an annualized basis during its Covered Period
  • If the borrower received funds from any other CARES Act program

Janover is still awaiting additional details concerning this developing topic. Rules and guidelines are very complicated and we strongly recommend that you consult your Janover team member.

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