SBA Simplifies The Forgiveness Process For Most PPP Loans



The US Small Business Administration (SBA) released new guidance Wednesday to make it easier and faster for businesses and nonprofits to forgive with payroll protection program (PPP) loans of $ 150,000 or less.

The SBA also announced that it will launch a new application portal on August 4, allowing borrowers to apply for forgiveness directly to the agency, rather than through their lender. More than 600 banks have agreed to provide access to the portal to over 2.17 million borrowers.

In a 29-page Interim Final Rule (IFR), the SBA introduced a COVID Revenue Decline Indicator that can be used during a forgiveness to document the required revenue cuts for second draw PPP loans. The new IFR also introduces a direct borrower forgiveness procedure for lenders who choose an alternative method of processing loan forgiveness applications.

In addition, the IFR extends the loan grace period for PPP loans in cases where the borrower timely appeals the SBA’s final decision to review the loan.

The PPP has provided over 11.7 million non-repayable loans totaling nearly $ 800 billion to small businesses and other eligible organizations affected by the economic fallout from the COVID-19 pandemic. Almost $ 400 billion has been forgiven.

According to the SBA, loans of $ 150,000 or less account for 93% of outstanding PPP loans.

Despite earlier steps to streamline the loan forgiveness process, many smaller PPP lenders told the SBA that they lack the technology and manpower to develop effective electronic loan forgiveness platforms for application processing.

Overwhelmed by the volume of PPP loans and bearing in mind the statutory requirement of 60 days for lenders to issue an SBA forgiveness decision after receiving a loan forgiveness application, many smaller lenders limit the time they will accept forgiveness applications from borrowers. This policy leaves borrowers unsure of whether they will have to start repaying their PPP loans while they wait for lenders to process their forgiveness applications.

In addition, the SBA said it heard concerns from PPP lenders of all sizes that requiring borrowers and lenders to review income cut documentation during forgiveness delays the forgiveness process for second-draw PPP loans of $ 150,000 or less. …

To address these issues and alleviate the bottleneck of forgiveness, the SBA is making two important changes, described below. Further guidance on both changes will follow shortly, the SBA said.

1. Introduction of COVID Revenue Decrease Indicator

To facilitate the forgiveness of second-draw PPP loans of $ 150,000 or less, if the borrower did not submit income reduction documentation at the time of loan application, the SBA will offer an alternative form of proof of income reduction.

Each PPP loan in the second draw of $ 150,000 or less will be assigned a COVID Revenue Impact Score generated by independent third-party contractor SBA based on a variety of inputs including industry, geography and business size, and current economic data on economic recovery and business return. in working condition.

The valuation will be maintained on the SBA Loan Forgiveness platform and will be visible to lenders for use as an alternative to documenting revenue declines. In addition, the score will be visible to those borrowers who apply for loan forgiveness through the platform using the direct borrower forgiveness process described in the next section.

When the estimate meets or exceeds the value required to demonstrate a reduction in the borrower’s revenue, the use of the estimate satisfies the requirement for the borrower to document the reduction in revenue. When the score does not meet the value required to confirm a decrease in the borrower’s revenue, and if the borrower has not yet provided the lender with documentation confirming the decrease in the borrower’s revenue, the borrower must provide documentation either directly to the lender (for those lenders who are not involved in the borrower’s direct forgiveness process) or provide documentation the lender by uploading it to the platform.

2. Launching the process of direct forgiveness of the borrower.

The SBA is launching a new direct forgiveness process that provides PPP lenders with an additional technology solution that will essentially allow their borrowers to apply for loan forgiveness directly to SBA through a new portal that will open on 4 August.

When a PPP lender chooses a direct borrower forgiveness process, the new portal will provide a single secure location that integrates with the SBA PPP platform and allows borrowers with loans up to USD 150,000 to apply for loan forgiveness using the electronic equivalent of the SBA Form. 3508S. Upon receiving notification that a borrower has applied for forgiveness through the platform, lenders will review the loan forgiveness application and issue a forgiveness decision to the SBA within the platform.

The SBA said the new forgiveness process will provide lenders with cost savings, increased efficiency and more timely transfer of farewell payments from the SBA, while borrowers will benefit from the ability to apply for forgiveness directly through the platform and reduce the waiting time and uncertainty associated with submitting through their lender.

After starting the direct loan forgiveness process, borrowers must continue to apply for loan forgiveness to their lenders, rather than through the platform, under the following circumstances:

  • The PPP lender does not agree to use the borrower’s direct forgiveness process;
  • The amount of the PPP loan of the borrower exceeds USD 150,000;
  • The borrower does not agree with the data provided by the SBA registration system, or is unable to verify his identity on the platform (for example, if an unregistered change of ownership has occurred); or
  • For any other reason, when the platform rejects the borrower’s application.

OHA Extension of Deferral of Appeals

The current rule for appealing final SBA loan renegotiation decisions on PPP loans provided that since the PPP borrower must begin to pay the principal and interest on the remaining balance of its PPP loan when the SBA transfers the forgiveness amount of the loan to the PPP lender (or notifies the lender that no loan forgiveness is allowed), an appeal by the PPP borrower against any final SBA decision to renegotiate the loan does not extend the grace period for the PPP loan. The IFR is amending the appeal rule to ensure that the borrower can promptly appeal the final decision to review the SBA’s loan, which will extend the grace period for the PPP loan until the SBA’s Office of Hearings and Appeals (OHA) makes a final decision on the appeal. The revised OHA rule will stipulate that the borrower must notify the lender of the appeal so that the lender can extend the grace period. The revised OHA rule requires an appeal to be filed with the OHA within 30 calendar days after the appellant receives the final SBA decision to review the loan.

The SBA’s new process and direct lending portal have been discussed in detail in two recent AICPA City Hall webcasts that address other issues and calculations for PPP forgiveness. Replays of webcasts are available for free at AICPA TV

AICPA experts discuss the latest news on PPPs and other small business assistance programs at the bi-weekly virtual town hall. Webcasts that provide CPE credit are free for AICPA members and $ 39 for non-members. Go to AICPA Town Hall Series web page for more information and registration. Recordings of town hall events are available for free viewing at AICPA TV

IN AICPA Payroll Protection Program Resources Page contains the resources and tools developed by AICPA to address the economic impact of the coronavirus.

For more news and messages on the coronavirus and how CPAs can tackle the outbreak-related issues, visit JofAwith coronavirus resource page or subscribe to our email notifications for the latest PPP news.

Jeff Drew ( This JofA senior editor.


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