New questions for businesses in the nine-page questionnaire – which the SBA said borrowers must complete within 10 business days of receipt – ask for details on quarterly income, capital expenditures, dividend payments and if any employees earn more than $ 250,000.
Erik Asgeirsson, president and CEO of CPA.com, said borrowers did not anticipate the questions when they applied for loans in the early days of the program.
“There will be a lot of feelings that it’s not fair,” he said.
The move – made with little explanation from the SBA – is the program’s latest flashpoint as concerns grow over whether businesses of all sizes will be able to have loans canceled as planned.
The Trump administration announced plans to review loans in late April after Shake Shack, Ruth’s Hospitality Group and other well-known publicly traded companies were among the first to receive loans in the initial wave of the program, which sparked a public backlash as funding ran out.
Congress then spent more money on the program, and nearly $ 134 billion remained unused on August 8 when the loan authorization expired.
In the questionnaire, the SBA said it was reviewing loans “to maximize program integrity and protect taxpayer resources.” The agency said in the document that the information “will be used to inform the SBA of your good faith certification review that economic uncertainty has made your loan application necessary to support your ongoing operations.
Failure to complete the form may cause the ASB to determine that a business was not eligible, and the agency may seek a refund “or pursue other available remedies,” depending on the form.
Running the review opens a new rift with the banks that were responsible for granting the loans and expected most to be canceled.
Tony Wilkinson, president and CEO of the National Association of Government Guaranteed Lenders, said the new process “could end up being a real mess for lenders and borrowers.”
He said banks would be responsible for entering business responses into the SBA’s system, creating potential risks of mistaken data entry or misunderstanding of information provided by borrowers.
“The process of helping the American worker cannot continue to be one of the tough times,” Wilkinson said. “Banks have been asked to be the government’s system for implementing PPPs, but we continue to be surprised very far in the process with new roles hitherto unknown to lenders. Participation in PPPs becomes a riskier proposition for lenders and borrowers with each new policy change. ”
For Wilkinson, this is further proof that Congress must revamp the program if lawmakers are to revive it as part of an economic relief plan.
“Unless Congress makes it clear in a forthcoming turnaround program that it takes over the reins of PPP and provides comprehensive and free solutions to facilitate the PPP process, few lenders will be able to continue participating in an extension or second round of the program, ”he said.