The Small Business Administration (SBA) issued a procedural Notice to lenders outlining the process of applying for forgiveness for their borrowers.
SBA will be accepting Paycheck Protection Program (PPP) loan forgiveness applications submitted by lenders on its portal beginning August 10, 2020. The date may be extended if any legislative amendments to the forgiveness process necessitate changes to the system. The portal may only be accessed by or on behalf of the lender of record for the PPP loan forgiveness application being processed.
PPP Loan Forgiveness Process – Roles and Responsibilities
- Borrowers prepare the forgiveness application and submits it to the lender.
- The Notice makes clear that calculating the specific forgiveness amount remains the borrower’s responsibility.
- The lender is expected to “perform a good-faith review, in a reasonable time, of the borrowers’ calculations and supporting documents.” If the lender identifies errors, it is to work with the borrower make corrections before it goes to SBA.
- The lender has up to 60 days in which to review the application and submit it to SBA.
- On August 10th, lenders may begin submitting forgiveness applications to SBA through an online platform. The date may be extended based on legislative amendments.
- The platform can only be accessed by lenders, and not individual PPP borrowers.
- SBA will email lenders instructions for using the portal prior to this date and will also post a link to the platform on its website.
Documentation and Data Required to be Submitted When the Lender Issues its Decision to SBA
According to the Notice, when the Lender issues its decision to SBA, it must submit through the Forgiveness Platform the required items that follow. The Lender must check a box indicating the decision being issued to SBA. The choices are as follows:
1) Approved in Full – Lender approved in full the forgiveness amount requested by borrower and the forgiveness amount requested by Lender equals that amount.
2) Approved in Part – Lender did not approve the full forgiveness amount requested by borrower and the forgiveness amount requested by Lender is less than the forgiveness amount requested by borrower.
3) Denied – Lender denied the entire forgiveness amount requested by the borrower.
4) Denied without Prejudice – Lender should use this status when an SBA loan review is pending at the time the borrower submits a loan forgiveness application.
What Happens After the Application is Submitted?
The SBA has up to 90 days to process the application and to remit to the lender the appropriate forgiveness amount, with interest, through the date of payment. If any amount remains unforgiven, the borrower begins equal monthly payments of principal and interest.
The August 10th date is not a deadline for a PPP borrower to submit their application and supporting materials to their lender. A borrower may submit a loan forgiveness application before the end of the 8-week or 24-week covered period if the borrower has used all of the loan proceeds for which the borrower requests forgiveness.
Lenders are then required by law to provide the borrower with a response within 60 days.
Are You Ready to Apply for Loan Forgiveness?
If you have questions about PPP loan forgiveness, our Blalock Walters attorneys can help you understand these ever-changing program requirements. You can also visit our coronavirus resource page for our updates on how COVID-19 affects you and your business.