Loans of $150,000 or Less May Qualify for Forgiveness

August 2021

The vast majority of Paycheck Protection Program (PPP) loans were made to businesses borrowing $150,000 or less. Many of these borrowers are stymied by the complexity of applying for loan forgiveness. Now, welcome relief is promised by the U.S. Small Business Administration launch of a streamlined application portal to apply for forgiveness directly through the SBA … without going through their bank.

Effective August 4, 2021, businesses seeking forgiveness of PPP loans of $150,000 or less may apply via the SBA portal and seek forgiveness from lenders that agreed to participate in the simplified process. Lenders are required to opt-in to this program and may do so through this link. Notably, the SBA estimated that more than 600 banks have elected to participate in the program. Collectively, those lenders represent 30 percent of all eligible loans.

That means a faster, smoother loan forgiveness effort for more than 2.1 million business borrowers that have not yet submitted their applications.

“This initiative will allow PPP borrowers to put their concerns of achieving full forgiveness behind them and focus on operating and growing their businesses again,” said Patrick Kelley, Associate Administrator for SBA’s Office of Capital Access. “We are pleased to be able to assist financial institutions across the U.S. in processing forgiveness applications for small business owners.”

Administrator Isabel Casillas Guzman added, “The SBA’s new streamlined application portal will simplify forgiveness for millions of our smallest businesses -- including many sole proprietors -- who used funds from our Paycheck Protection Program loans to survive the pandemic. These entrepreneurs are busy running their businesses and are challenged by an overly complicated forgiveness process. We need to deliver forgiveness more efficiently, so they can get back to enlivening our Main Streets, sustaining our neighborhoods and fueling our nation’s economy.”

Previous efforts to streamline loan forgiveness resulted in smaller PPP lenders voicing concerns that they don’t have the technology or human resources to process the applications. Additionally, SBA heard concerns from PPP lenders of all sizes that the requirement for borrowers to submit and lenders to review at the time of forgiveness is delaying the forgiveness process.

These reports prompted the SBA to make loan forgiveness easier for borrowers and their bank through initiation of the online direct forgiveness portal to address bank processing efficiency worries. Upon notification of submission of a borrower forgiveness application, participating lenders will review the request via the portal and issue a decision to SBA.

The anticipated net benefits are reduced costs, increased efficiency, and enhanced timely remittance of forgiveness payments from SBA. Additionally, borrowers win by the ability to submit loan forgiveness applications directly through the online portal and reduce the wait time and uncertainty previously associated with submission through their lender.

The online portal asks few questions and may not require companies to submit any documentation. Significantly, the SBA will permit a “COVID Revenue Reduction Score” developed by an independent SBA contractor as an alternative to the revenue decline documentation. The score, based on Dun and Bradstreet’s Commerce Health Index, combines various public and proprietary data sources that include … industry, geography, business size, business-to-business expenditures, employment/unemployment statistics and foot traffic.

The resulting score will reflect declines in revenue for review and acceptance by the SBA as adequate documentation that the borrower met the revenue reduction standard as required by regulation. Failure to meet the minimum standard will require the borrower to upload documentation into the portal that demonstrates a revenue loss in 2020 of at least 25 percent compared to 2019.

Click here for details presented in the Direct Forgiveness Portal User Guide. Business owners who need help are urged to call a PPP customer service team at 877-552-2692 between 8 a.m. and 8 p.m. Monday-Friday.

Takeaways

Business owners who believe they qualify for forgiveness are urged to apply via the SBA portal asap.

Virginia business owners and managers … please be sure to re-visit our March article on the topic of:
PPP LOAN FORGIVENESS & VIRGINIA SMALL BUSINESSES.

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