The issue of economic necessity is a central theme in the Paycheck Protection Program (PPP). When launched as part of the CARES Act, the Small Business Administration (SBA) wanted to ensure needed loans were made to businesses most impacted by the pandemic. The topic of necessity is one that has surfaced throughout the program and is formally addressed in the PPP FAQs (question #31 and #43). In order to validate the initial certifications about necessity, the SBA has formally requested the Office of Management and Budget to approve a questionnaire designed to collect additional loan necessity information. The questionnaire has two versions including SBA Form 3509 for nonprofit organizations and 3510 for businesses. It is required to be completed by borrowers with loans of $2M and greater. To help clients, prospects and others, Hanson & Co has provided a summary of key details below.

Business Activity Assessment

This section contains 8 total questions focused on the borrower’s business activities and impact due to the COVID-19 pandemic. A highlight of the assessment includes:

  • A request for the borrower’s gross revenue for the second calendar quarter of 2019 and 2020. For seasonal or new businesses specific time period information is given.
  • A request for information on whether the borrower has been required to shut down to comply with state or local government regulations. Information about the shutdown dates and government agency issuing the order must be provided.
  • Details on whether the borrower has been forced to significantly alter operations to comply with a COVID-19 government order is requested. There are several follow up questions designed to identify the timeframe and number of impacted locations.
  • A request for information on whether the borrower has voluntarily ceased or reduced operations due to COVID-19. Specific details on why the decision was made are requested.

Liquidity Assessment

This section contains 13 questions and focuses on the borrower’s liquidity and financial situation on the date of loan application among other things. A highlight of the assessment includes:

  • A request for the amount of cash and cash equivalent on hand on the last day of the calendar quarter immediately before the PPP loan application was submitted.
  • A request for information on whether the borrower has prepaid any outstanding debt between March 13, 2020, and the end of the covered period.
  • Asks borrowers whether any employees were compensated an amount that exceeds $250,000 on an annual basis.
  • Inquires whether on the date of the PPP loan application, if any of the borrower’s equity were listed on a national securities exchange.
  • A request to know whether the borrower received any funds from any CARES Act program, other than the PPP, excluding tax benefits.


Once complete, borrowers must make the following certifications.

  • Confirm signatory authority on behalf of the borrower.
  • Confirm that all information provided in the form and supporting documentation is true and correct in all respects.
  • Must also confirm that a “reasonable inquiry of people, systems, and other information available to the borrower”.

Contact Us

Since it is unclear when lenders will start sending these forms to borrowers, it is important to start reviewing the questionnaire and prepare supporting documentation. This will make it easier to complete and submit the document in a timely manner. If you have questions about the information outlined above or need assistance with another PPP issue, Hanson & Co can help. For additional information call us at 303-388-1010 or click here to contact us. We look forward to speaking with you soon.