SBA takes over PPP loan forgiveness

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The Federal Small Business Administration is exempting banks from reviewing forgiveness applications for some loans made under the government’s payroll protection program as part of its 2020 COVID-19 relief efforts.

A policy change that applies to loans of US $ 150,000 or less is described in a recent message to the Federal Register, the main organ of the government for disseminating information about changes in official policy.

According to government figures, 93 percent of PPP loans were $ 150,000 or less.

Explaining its decision, the agency wrote: “Despite the introduction of a simplified 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 solutions. electronic loan forgiveness platforms to process the new simplified loan forgiveness application.

“The SBA also learned that because lenders are overwhelmed by the volume of PPP loans and remember the 60-day statutory requirement for lenders to issue a forgiveness decision with the SBA from the moment they receive a loan forgiveness application from the borrower, lenders are restricting loan disbursements. Forgiveness applications are accepted 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 loan forgiveness applications. ”

The Washington Post quoted Patrick Kelly, Deputy Administrator of the SBA’s Capital Access Authority, as saying in a prepared statement: “This initiative will allow PPP borrowers to put their concerns about achieving full forgiveness and focus on operating and growing their business. again.”

mail reported that at least one banking trading group, the Consumer Bankers’ Association, supported the rule change.

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