SBA Launches Simplified Online PPP Forgiveness Portal for Loans Up to $ 150K

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The SBA announced on Wednesday small businesses that have borrowed up to USD 150,000 through Payroll protection program will soon be able to apply for loan forgiveness using the “optimized application portal” on the Internet.

IN directforgiveness.sba.gov The Small Business Management Portal will open on Wednesday August 4th for borrowers whose lenders have agreed to use the forgiveness tool.

“As one of the leading PPP lenders in the country, Customers Bank is proud to partner with SBA to provide a flexible digital loan forgiveness service for small business borrowers,” Sam Sidhu, CEO of Customers Bank, said Wednesday. “SBA’s streamlined and efficient PPP Loan Forgiveness Portal will help borrowers and lenders move forward with economic growth and job creation following the pandemic. We encourage other lenders to join Customers Bank and subscribe to the SBA Portal. ”

The agency estimates that more than 600 banks, collectively representing 30 percent of eligible loans of up to US $ 150,000 or less, have participated in the program.

This will enable more than 2.1 million borrowers to take advantage of what the SBA has described as an easier process for forgiving COVID-19 economic aid loans.

“The new streamlined SBA Application Portal will make it easier to forgive millions of our smallest businesses, including many sole proprietors, who used our payroll protection loan to weather the pandemic,” SBA Administrator Isabel Casillas Guzmán said in a statement. “The vast majority of businesses awaiting forgiveness have loans of up to $ 150,000. These entrepreneurs are preoccupied with their businesses and face an overly difficult process of forgiveness. We need to more effectively offer forgiveness so that they can return to revitalizing our main streets, maintaining our neighborhoods and fueling our country’s economy. ”

The online portal, which will launch Wednesday, asks few questions and may not require any documentation from companies at all. based on the presentation that SBA provides on the website. Repair shops and other small businesses that need assistance with PPP can call PPP Customer Service at 877-552-2692 from 8:00 AM to 8:00 PM, Monday through Friday.

The COVID-19 payroll protection program runs from April 3 to August. January 8, 2020 (with a short break) and again from January 11 to May 31, 2021. Many 2020 borrowers were eligible to apply for a ‘second draw’ loan in 2021.

Overall, the program has approved more than $ 799.8 billion in government-backed, potentially fully forgivable loans to more than 11.8 billion small businesses, including many national auto repair shops.

According to the SBA, the average government loan in 2021 was about $ 42,000 and in 2020 it was $ 101,000.

Analysis of news from repairmen small business administration NAIKS 811121 “Repair and maintenance of the body, painting and interior of cars” Borrowing data shows the collision repair industry is ripe for an easy forgiveness program. (While this includes some non-collision businesses such as upholstery shops, the government data category NAICS 811121 excludes glass and machine shops and provides a pretty good way of analyzing the industry overall.)

According to the SBA, 27,256 Automotive Bodies companies received Loans with a first or second installment under PPP in 2020 or 2021, and 10,855 stores took advantage of lending with a second loan in 2021. However, 1,078 first or second stage loans remain outstanding.

As of June 30, 2021, only 14,119 repair shops received some or all of their loans forgiven the first time, and only 573 shops received loan forgiveness a second time.

The average first loan was about $ 58,202 and only 2,537 repairmen – less than 10 percent – borrowed more than $ 150,000 in the first draw.

The average second loan amount was about $ 77,155. Only 1407 out of 10,855 creditors of the “second draw” received more than $ 150,000.

Simplifying forgiveness

PPP loans and interest are completely forgivable if the business spends all or most of the money on employee salaries and the remainder on approved critical expenses such as utilities. The idea was to help companies hit by business losses due to the pandemic keep employees at work, rather than using layoffs to make ends meet.

However, it has been argued that the forgiveness process is a headache that small businesses don’t need.

AQN strategies in 2020 are reasoned that the original 11 pages of government pardon forms and instructions in May 2020 are placing a counterproductive burden on small businesses. The research firm also pointed out that small dollar loans can actually cause banks to lose money if the loans fall due. They argued that the automatic forgiveness of anything $ 150,000 or less would be better for society than the initial process, even if a few unworthy sides escaped the cracks.

However, the government tried to simplify the forgiveness process throughout 2020, and Congress in December 2020 ultimately approved Measures to combat COVID-19 requiring no more than one-page forgiveness form for borrowers up to $ 150,000

This Law on Economic Assistance also resumed the issuance of PPP loans to businesses that had not yet used the program and allowed borrowing a second time for businesses that had already received a PPP loan.

The ‘first draw’ PPP loans in 2021 will provide loans of up to $ 10 million to companies with 500 or fewer employees that did not receive a PPP loan in the past year. These fully forgivable loans basically follow the same rules as the 2020 PPP program, including qualification by good faith: “The current economic uncertainty makes this loan request necessary to support the applicant’s ongoing operations.”

The “second draw” PPP loans were capped at $ 2 million and were only available to companies with 300 or fewer employees. This time, the company’s gross revenue was expected to decline by 25% for at least one quarter of 2020. This could have been proven during the loan or now during the application for forgiveness.

“Despite the introduction of a streamlined loan forgiveness application for borrowers with loans of $ 150,000 or less, many smaller PPP lenders continue to express concerns to the SBA that they do not have the technology or human resources to develop effective electronic platforms for loan forgiveness for processing. new simplified loan forgiveness statement, “the SBA wrote in an interim final rule published on July 23.” The SBA also learned that as lenders are overwhelmed by the volume of PPP loans and are taking into account the statutory 60-day loan requirement for lenders. a decision to forgive the SBA from the moment the loan forgiveness application is received, lenders limit the time it takes to accept loan forgiveness applications from borrowers, creating uncertainty among borrowers that they will have to start making payments on their PPP loans while they wait for their lenders to accept and process their applications for loan forgiveness.

“In addition, the SBA has heard concerns from PPP lenders of all sizes that requiring borrowers to provide and lenders to consider, at the time of forgiveness, documentation of a $ 150,000 or less reduction in PPP proceeds from the second draw of PPPs is delaying the forgiveness process for these borrowers. … “

Therefore, the agency has planned two additional steps to make life easier for these lower-income borrowers and their banks.

First, he invented an online portal of direct forgiveness, which freed banks from the burden of collecting such a tool themselves and from the work of collecting data.

“When a PPP lender agrees to the direct borrower forgiveness process, the Platform will provide a single safe place for all its borrowers with loans of USD 150,000 or less to apply for loan forgiveness through the platform using the electronic equivalent of the 3508S SBA Form. “- wrote the SBA in its interim final rule. “Upon receiving notification that the borrower has filed a request for forgiveness through the Platform, lenders will review the loan forgiveness application on the Platform and issue a forgiveness decision for the SBA within the Platform. The SBA believes that lenders who agree to use the direct forgiveness process of borrowers will benefit from cost savings, increased efficiency and more timely transfer of farewell payments from the SBA, while borrowers will benefit from the ability to apply for loan forgiveness directly through the platform and reduce waiting times and uncertainties associated with filing an application through your lender. “

Second, the SBA will authorize the COVID Revenue Impairment Indicator, developed by the independent contractor SBA, as an alternative to revenue impairment documentation.

“The assessment uses current data on economic recovery and business recovery,” the SBA said in a statement. He said he takes into account “industry, geography and business size.”

If a company has received a “second draw” loan without documentation, the bank can simply check the appraisal tool and see if the government believes that the borrower does not need to worry about providing evidence.

“The independent third-party contractor will use the Consumer Recovery Index, which aggregates multiple sources of data on product and / or service consumption (traffic, third-party data, credit card spending, etc.) provided by businesses,” notes SBA. wrote. “In addition, through the Business Response Index, the score will measure the return of businesses to a working state, which includes data on employment and unemployment, inter-business payment transactions, workplace mobility and attendance, and visitor frequency in physical locations. The resulting estimate will reflect the decline in income. The contractor advised the SBA that this methodology will result in a score that will adequately document that the borrower has met the revenue reduction standard as required by section 7 (a) (37) (I) (i) (II) of the Small Business Act. … “

As we read, the government mostly plays into the hands. Think of small businesses like gyms or bars in states that have blocked them more seriously than other businesses during the pandemic. Does the SBA or bank really need proof of income to believe that such a small business fell 25 percent in the last year’s quarter? Even if a couple of quirky gyms or bars that did well last year slip through the cracks, it’s probably best to use the time of businesses, banks and agencies to simply assume that the local sector deserves its ‘second draw’ loans and move on. … Remember, we’re only talking about $ 150,000 or less for one unworthy company. This looks like a rounding error for the US government and economy.

More information:

“SBA Announces Opening of Direct Forgiveness Portal for Payroll Protection Program”

Small Business Administration, Jul 28, 2021

A compilation of news from repairers containing data on the use of PPP NAICS 811121 “Automotive body”

SBA, data are valid until July 1, 2021

SBA Direct Forgiveness Portal

PPP Direct Forgiveness Portal User Guide

SBA Payroll Protection Web Page

Forms of forgiveness PPP SBA

“Interim Final PPP Rule – COVID Revenue Reduction Indicator, Direct Borrower Forgiveness Process, and Appeal Deferral”

SBA, Jul 28, 2021

Pictures:

Small Business Administrator Isabella Guzman. (Courtesy of SBA)

This Small Business Administration slide demonstrates how the direct forgiveness portal in the Payroll Protection Program may not require documentation from a borrower for less than $ 150,000. (Courtesy of SBA)

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