Are you a small business owner or self-employed and received a Paycheck Protection Program (PPP) loan and are still waiting for your bank to forgive the loan? Here is some good news for you!
On Wednesday 07/28/21 the U.S. Small Business Administration (SBA) published new guidance designed to simplify and speed up the forgiveness process for businesses and not-for-profits with Paycheck Protection Program (PPP) loans of $150,000 or less.
The SBA also announced that it will launch a new application portal Aug. 4, allowing borrowers to apply for forgiveness directly with the agency instead of having to go through their lender. More than 600 banks have agreed to allow access to the portal for more than 2.17 million borrowers.
In a 29-page interim final rule (IFR), the SBA introduced a COVID Revenue Reduction Score that can be used at the time of forgiveness to document the required revenue reduction for second-draw PPP loans. The new IFR also establishes a direct borrower forgiveness process for lenders that choose to opt in as an alternative method of processing loan forgiveness applications.
Despite earlier moves to streamline the forgiveness process for those loans, many smaller PPP lenders have informed the SBA that they lack the technology and manpower to develop efficient electronic loan forgiveness platforms to process applications.
Overwhelmed by the volume of PPP loans and mindful of the statutory 60-day requirement for lenders to issue a forgiveness decision to the SBA from receipt of the borrower’s loan forgiveness application, many smaller lenders are limiting when they will accept forgiveness applications from borrowers. This policy leaves borrowers uncertain if they will have to start making payments on their PPP loans while they are waiting for their lenders to process their forgiveness applications.
In addition, the SBA said it has heard concerns from PPP lenders of all sizes that the requirement for borrowers to submit and lenders to review revenue reduction documentation at the time of forgiveness is delaying the forgiveness process for second-draw PPP loans of $150,000 or less.