Small Business Administration to revamp PPP forgiveness in bid to end historic program
The Small Business Administration this week will begin a push to accelerate the end of the nearly $1 trillion Paycheck Protection Program by making it easier for millions of employers to have emergency payroll loans forgiven.
The SBA on Wednesday plans to outline a new initiative aimed at encouraging borrowers with loans of $150,000 or less — accounting for more than 90 percent of the pandemic-era program — to apply for loan forgiveness. The ability to convert PPP loans into grants in exchange for maintaining payroll was a critical feature of the small business rescue. Nearly 7 million of those loans have not been forgiven.
The move is an effort to wind down one of the government's biggest and most popular relief programs, which issued nearly $800 billion in forgivable loans from April of last year through this May. The unprecedented aid effort suffered repeated bureaucratic snags and was a target for fraud. The new Biden administration changes are just the latest attempt to course correct.
The SBA has notified banks — which were responsible for issuing the government-backed loans and processing forgiveness requests — that the agency is setting up its own online, consumer-facing forgiveness platform.
Rather than forcing borrowers to apply through banks, the SBA forgiveness site will accept applications from small borrowers directly in a format that officials estimate will take businesses just a few minutes to go through. Lenders will still have a say in whether individual PPP loans should be forgiven, but the intent is to reduce the amount of time and effort that banks have to invest in the process.
In addition, the SBA will announce plans to spare certain borrowers who received second PPP loans this year worth less than $150,000 from having to supply documentation proving that they suffered a 25 percent revenue reduction in 2020 that was required to receive the aid. The agency has told lenders that it's using a combination of data sets to make the determinations, including information based on foot traffic and credit card charging.
SBA Associate Administrator Patrick Kelley made a personal plea to lenders on a webinar Tuesday, as he urged them to opt in to the SBA's new forgiveness platform — "give it over to the government and get your life back." The SBA plans to launch the site on a pilot basis on Wednesday and have it go live around Aug. 4.
"All of us want to be done with forgiveness — borrowers, lenders, government — by the fall, across the board," Kelley said. "So this is the final push that will hopefully put PPP in the rearview mirror for the borrowers, for the lenders and for the agency."
