The Small Business Administration (SBA) has released new directives to streamline the forgiveness process for self-storage and other businesses that received Paycheck Protection Program (PPP) loans of $150,000 or less. It also launched an online portal that allows borrowers to apply for forgiveness directly through the agency rather than their lender.
The PPP was launched last year to help business owners who were negatively impacted by the COVID-19 pandemic. It was designed to forgive loan repayment as long as borrowers adhered to the terms and conditions, such as using the funds to maintain payroll, pay rent on a business building or make company mortgage payments.
The revised forgiveness process includes a COVID Revenue Reduction Score that can be used to document the required reduction for second-draw PPP loans. In addition, the SBA extended the loan-payment deferment period for borrowers who make an appeal with the SBA Office of Hearings and Appeals (OHA). Borrowers won’t be required to make payments on their PPP loans while the OHA considers their case, as long as they filed in a timely manner.
The online portal allows lenders to review forgiveness applications and submit their decision directly to the SBA. Previously, they had to collect applications on their own and send their decisions to the SBA for approval. Thus far, more than 600 banks have opted into the direct-forgiveness program, allowing more than 2.17 million borrowers (accounting for about 30% of loans) to apply through the portal, according to an SBA press release.
Using the portal isn’t mandatory, however. If a bank doesn’t opt in to the system, borrowers must continue to submit loan-forgiveness applications directly to their lenders, according to a source.
“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 PPP loans to survive the pandemic,” said SBA Administrator Isabel Casillas Guzman. “The vast majority of businesses waiting for forgiveness have loans under $150,000. 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.”
Thus far in 2021, the SBA has approved more than 6.5 million loans, totaling more than $275 billion. In all, 96% of loans have gone to businesses with less than 20 employees compared to 87% in 2020. The average loan size this year has been about $42,000 compared to $101,000 in 2020, the release stated.
Sources:
Forbes, Borrower Friendly PPP Loan Forgiveness Regulatory Changes Provided by the New SBA Regulation
Small Business Trends, PPP Loan Forgiveness Portal Now Open
SBA, PPP Loan Forgiveness
SBA, SBA Announces Opening of Paycheck Protection Program Direct Forgiveness Portal
