Businesses that borrowed $150,000 or less from the Paycheck Protection Program (PPP) during the COVID-19 pandemic could see a reprieve in the time it takes to apply for forgiveness. The Small Business Administration (SBA) notified lenders of its plan to open a portal through lending institutions that opt-in to use it, so if your PPP loan lender opts-in then you can take advantage. The SBA anticipates the entire loan forgiveness application process could take applicants only a few minutes.
The SBA released this information and additional details about its new COVID Revenue Reduction Score on July 28, 2021 in its Interim Final Rule on PPP loan forgiveness. The score impacts second-draw PPP loan recipients
How Will Lending Institutions be Impacted
There’s an upside for lenders that opt-in to the program, most notably those with limited IT and human resources support. The SBA plans to accept applications directly from the approved borrowers through the portal with the goal of reducing the time lenders would have to spend processing applications. The lender still will review the application and make a recommendation to the SBA. Again, lending institutions must opt-in to the portal.
Fintech lender Biz2Credit is a lender who plans not to use the new portal.
“Our stance is that we already have a very simple PPP forgiveness process for clients and that they should continue to use it,” said Charles Groome, Vice President of Marketing for Biz2Credit. “That is the fastest way for them (borrowers who worked with Biz2Credit) to get support from our team should they need it.”
More than 90 percent of PPP loans granted from April 2020 to May 2021 were for $150,000 or less, according to the SBA — and nearly 7 million have yet to be forgiven — so this could be a significant workload reduction for lenders. The SBA provided a list of lenders who have opted-in to using the portal.
How Does the Process Work for PPP Loan Forgiveness?
Borrowers who received PPP loans of $150,000 or less will have a single, secure location to complete the electronic version of SBA Form 3508S when applying for loan forgiveness. Registration will be available to borrowers when lenders opt-in to use the portal. Lenders still will need to approve individual borrowers with the SBA prior to them being able to apply for forgiveness through the portal.
Applicants should direct any questions about the loan forgiveness process to their PPP lender or the SBA, including on how to appeal a decision made by the lender. Borrowers have 30 days after notification of the original decision to file an appeal, during which time the deferment period of the PPP loan is extended until the appeal is reviewed and a final decision is made.
Documentation Changes to the PPP Loan Forgiveness Process
The IFR detailed changes in documentation requirements for recipients of a second-draw PPP loan of $150,000 or less. Under original guidance, borrowers with loans of $150,000 or less did not need to show proof of a revenue reduction of 25 percent or more at the time of the PPP loan application to determine eligibility. Instead, these borrowers needed to demonstrate the reduction before or at the time of applying for loan forgiveness. Now, the SBA has indicated to lenders they will use a COVID Revenue Reduction Score.
For businesses that borrowed $2 million or more, the SBA no longer requires borrowers complete the Loan Necessity Questionnaire when applying for PPP forgiveness, according to information provided by the agency in a July 2021 webinar.
Despite the decrease in documentation required by the SBA for some PPP loan forgiveness applications, it’s important that businesses produce and save documentation during the process for their records. Record retention requirements vary and are based on the forgiveness application borrower’s use. The 3508S requires borrowers to maintain documentation for four years after the date the loan is forgiven or repaid in full, while Form 3508 and 3508EZ user must retain documentation for six years.
Oasis Can Help
We understand that running a business presents unique challenges that require your time and attention. You might still be trying to get back to full staffing or adapting your business to meet compliance requirements by federal, state and local governments. Spending time on PPP loan forgiveness applications pulls your focus away.
We continue to develop and enhance our resources and tools that can help simplify the complexities of trying to secure PPP loan forgiveness.
- PPP Loan Forgiveness Estimator and FAQs
- PPP Loan Forgiveness Estimator for Oasis® clients
- Includes section to optimize combination of employee retention tax credit and PPP
- Data auto-populates from your latest payroll run
- Signature-ready form created for review and submission to lender
- View a webinar featuring HR technology expert demonstrating our loan forgiveness estimator
Does your business still need funding to operate? Our Financial Relief Tool on the COVID-19 Help Center provides details to help you navigate other financial options. We recommend consulting with your accounting professional or trusted advisor to determine what better suits your business needs.