SBA Changes Forgiveness Process on Loans of $150,000 or Less

New Initiative

On July 28, 2021, the Small Business Administration decided to allow PPP borrowers with loans of $150,000 or less to apply for forgiveness online.

Under this new initiative, the borrower's lending bank or institution has to opt-in to allow the SBA to process these forgiveness applications. And they will still issue a decision on whether to grant forgiveness. The portal with the SBA opened on August 4, 2021.

Banks and other lending institutions have been dealing with the cost of processing applications from borrowers who want forgiveness for about a year now. Through May 2021, nearly $800 billion in forgivable PPP loans have been funneled to Main Street USA businesses.

Details

According to Consumer Bankers Association CEO Richard Hunt, "the creation on a new PPP forgiveness platform will allow more small businesses to focus their time and resources on successfully reopening, while also providing lenders the choice to retain oversight of their customer relationships."

The SBA has received many comments from borrowers and lenders stating that "the loan forgiveness process is overwhelming and difficult to manage".

During 2020 more than $521 billion PPP loans were issued. Loans totaling about $279 billion have been forgiven, and another $81 billion in loans are currently in review according to SBA data. Loans of $150,000 or less account for about 93% of the outstanding PPP debt, again according to the SBA data.

Deadline

According to SBA instructions, borrowers can apply for forgiveness any time up to the maturity date of the loan. If borrowers do not apply for forgiveness within 10 months after the last date of the covered period, then the PPP loan payments are no longer deferred and the borrowers will begin making loan payments to their PPP lender.

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*Updates and guidance are issued daily. The information above may change.