Question of the Week
SBA Streamlines PPP Forgiveness Again
Happy Friday, all!
Small business owners got some good news from the U.S. Small Business Administration this week. The agency announced a streamlined application portal to allow borrowers with Paycheck Protection Program (PPP) loans of $150,000 or less through participating lenders to apply for forgiveness directly through the SBA.
This new change will help some 6.5 million small businesses with loans under $150,000. At the beginning of the year, the SBA released a streamlined application for borrowers – Form 3508S, for these smaller loans, which predominate the total amount of loans.
In 2021, the SBA approved over 6.5M loans totaling over $275B. The average loan size was around $42,000 compared to $101,000 in 2020) Additionally, 96% of loans went to businesses with fewer than 20 employees (compared to 87% in 2020.) According to SBA statistics, 32% of loans went to companies in low- to moderate-income communities (compared to just 24% in 2020)
Overall, the SBA and lenders have made over 11.7 million loans totaling nearly $800 billion in relief to over 8.5 million small businesses.
“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 Paycheck Protection Program loans to survive the pandemic,” said Administrator Isabel Casillas Guzman in the SBA press release. “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.”
The new forgiveness platform will begin accepting applications from borrowers on August 4th, 2021. Lenders are required to opt-in to this program through https://directforgiveness.sba.gov. According to the SBA, over 600 banks have opted into direct forgiveness, enabling over 2.17mm borrowers to apply through the portal. These banks represent 30% of loans $150,000 or less that have not yet been submitted for forgiveness.
In addition to the technology platform, the SBA is implementing a PPP customer service team to answer questions and directly assist borrowers with their forgiveness applications. Borrowers that need assistance or have questions should call (877) 552-2692, Monday – Friday, 8 a.m. – 8 p.m. EST.
Established by the CARES Act in 2020, the PPP was among the first COVID-19 small business economic aid programs. It provided more than $798 billion in financial relief to small businesses and nonprofits across the nation, keeping employees working and helping companies survive the pandemic. The help included two rounds of loan funding for particular companies. This Interim Final Rule is the latest in a slew of adjustments and tweaks the SBA has made to the program that closed at the end of May.
Other programs include Economic Injury Disaster Loan (EIDL), EIDL Advance, Targeted EIDL Advance, Supplemental EIDL Advance, Restaurant Revitalization Fund, Shuttered Venue Operators Grant, and SBA Debt Relief program. To learn more about these programs, please visit www.sba.gov/relief.
Quote of the Week
“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.” – SBA Administrator Isabel Casillas Guzman
Task of the week
If you’re in the group of business owners who have not applied for forgiveness yet, keep your eyes open from an email from your loan servicer. They will let you know whether they have opted-in to the new SBA portal.