Updated Paycheck Protection Program Loan Forgiveness Process

The U.S. Small Business Administration (SBA) has launched a Payment Protection Program (PPP) Direct Forgiveness Portal, which will help streamline the forgiveness process for loans of $150,000 or under, and allow small business owners to apply directly through the SBA. The new forgiveness platform will begin accepting applications from borrowers on August 4, 2021 and is currently operating under an invite-only pilot period. 

Small business owners who applied for a PPP loan should be aware of the processes and requirements to apply for PPP loan forgiveness. Taking the following steps to complete the loan forgiveness process will give you peace of mind. 

Here are some key facts to consider as you navigate the process.

About the PPP Direct Forgiveness Portal

  • Only some lenders will be participating in the SBA portal. Lenders may opt in to using the portal instead of handling the forgiveness process themselves. 
  • Only PPP borrowers with loans under $150,000 may use the SBA portal. If your loan is larger, you will need to apply for forgiveness through your bank. The SBA portal uses an electronic form equivalent to SBA Form 3508S.
  • Upon receipt of notice that a borrower has applied for forgiveness through the portal, lenders will review the application and issue a forgiveness decision to the SBA, all within the portal. 
  • The SBA will be issuing more detailed guidance regarding 
  1. the process for lenders to opt-in to the direct forgiveness portal,
  2. the process for borrowers with loans of $150,000 or less to access the portal and submit their loan forgiveness applications directly through the portal, and
  3. the process for lenders to access the applications in the portal to perform reviews of their borrowers’ applications, issue forgiveness decisions to the SBA, and request forgiveness payments from the SBA.
  • During the transition period after the launch of the direct forgiveness process, lenders that opt-in will be expected to complete the processing of any applications that have already been submitted by borrowers to the lender and should inform such borrowers not to submit a duplicate loan forgiveness application through the portal.

After the launch of the portal, borrowers will continue to submit loan forgiveness applications to their lenders, rather than through the portal, under the following circumstances: 

  • The PPP lender does not opt-in to use the direct borrower forgiveness process;
  • The borrower’s PPP loan amount is greater than $150,000;
  • The borrower does not agree with the data as provided by the SBA system of record, or cannot validate their identity in the portal (for example, if there is an unreported change of ownership); or 
  • For any other reason where the portal rejects the borrower’s submission.

You can only apply through the SBA’s portal if you have not already submitted a forgiveness application with your lender..

Get in touch with your lender

The SBA began accepting forgiveness application forms on August 10, 2020. But while the SBA released its own form, borrowers may complete the forgiveness process through their lender, as they may have their own forms and requirements to process the application. Please note that some lenders have opted in to process the forgiveness process through the PPP Direct Forgiveness Portal, so make sure to get in touch with your lender to confirm their unique loan forgiveness process.

Some additional documents you may need to submit are:

  • Payroll records
  • Receipts and agreements for approved non-payroll costs (mortgage interest, rent, utilities)
  • Other documents deemed necessary by the SBA

Be aware of the timeline

Small business owners may apply for PPP loan forgiveness at any time before the loan is due, but experts advise borrowers to initiate and complete the application forms within 10 months of having received the loan. After the initial 10 months pass, the PPP funding converts to a loan (at 1% interest rate) so you still have some time to get your application in.

How to apply

You either will apply through your bank for forgiveness or through the SBA's portal. There are three possible outcomes:

  • Full forgiveness
  • Partial forgiveness (some amount converts to loan)
  • No forgiveness (all of it converts to loan)

Appealing for partial loan forgiveness

If your loan is partially forgiven, you can appeal through the financial institution where the PPP loan originated. 

  • Keep making any payments on the loan while it's under appeal
  • Your provider must notify you within 30 days that you have the right to appeal
  • You must request the appeal through your PPP provider, which will automatically notify the SBA
  • The SBA will decide, in its sole discretion, whether to review the loan
  • When SBA selects a loan for review, the provider will receive a notice that SBA is reviewing the loan
  • Reversal decisions will be notified to the lender. The lender will be responsible for reimbursing any overpayments

You may not need to complete the loan forgiveness application

PPP loans under $150,000 borrowers are only required to sign and submit a one-page SBA-approved certification to the lender. Borrowers will also need to provide a description of the number of employees retained due to the loan, and the estimated amount of the covered loan spent on payroll costs and the total loan amount. Borrowers must attest that they complied with PPP loan requirements, including that at least 60 percent of the funds were spent on payroll.

The SBA announced on July 6, 2021 that it would eliminate the loan necessity review for PPP loans of $2 million or more, and said further guidance would be forthcoming.

Who qualifies for the EZ Forgiveness Form?

Certain borrowers are eligible to fill out the EZ Form, which is a simplified loan forgiveness form. Borrowers are eligible to fill out the EZ form if they meet one of the following criteria:

  • Are self-employed and have no employees; OR
  • Did not reduce the salaries or wages of their employees by more than 25%, AND did not reduce the number or hours of their employees; OR
  • Experienced reductions in business activity as a result of health directives related to COVID-19, AND did not reduce the salaries or wages of their employees by more than 25%.

For more information and to see the frequently asked questions on loan forgiveness, visit the U.S. Small Business Administration's FAQ about PPP Loan Forgiveness.

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