Forgiveness can be challenging for many individuals, but it turns out the Small Business Administration (SBA) is also having a difficult time with it too. It has been reported by many lenders there have been challenges encountered managing the hundreds of Paycheck Protection Program (PPP) loan forgiveness applications received resulting in delays. Concurrently, borrowers have also been challenged by trying to work through an overly burdened forgiveness process. To address these issues, the SBA recently issued a new Interim Final Rule (IFR) which makes several changes designed to simplify and speed up the process. While there were several changes outlined including a new COVID Revenue Reduction Score and extended deferment for loans under appeal, it is the new loan forgiveness portal that will affect most borrowers. To help clients, prospects, and others, Wilson Lewis has provided a summary of the key details below.
Due to the delays experienced in the forgiveness process, especially those impacting the small businesses and sole proprietors, the SBA will launch a direct loan forgiveness portal on August 4, 2021. The portal is designed to accelerate loan forgiveness by allowing borrowers to directly apply with the SBA. The shift will not only reduce the processing burden on lenders but also make it easier for borrowers to submit needed information.
Use of the portal will be limited to those with loans of $150,000 or less, originating lender must have opted into the direct forgiveness portal, conduct identity verification, and not have the forgiveness application rejected for any reason. If this does happen, the borrower is then required to contact the lender to identify an alternative means of application submission.
According to the SBA, there are currently over 600 banks that have opted into direct forgiveness, enabling over 2.1M borrowers to apply through the portal. This represents 30% of outstanding loans of $150,000 or less which have not yet applied for loan forgiveness. It is expected more banks will opt-in to the program in the coming weeks.
The SBA has provided several resources for borrowers to reference including a direct forgiveness platform user guide, a list of frequently asked questions, and a new customer service number (877-552-2692) for portal-related issues.
The new portal and other changes outlined in the IFR are expected to make loan forgiveness easier for Atlanta borrowers. At the same time, the SBA indicated additional guidance will soon be published that provides additional details and instructions about the changes. If you have questions about the information outlined above or need assistance with PPP loan forgiveness, Wilson Lewis can help. For additional information call us at 770-476-1004 or click here to contact us. We look forward to speaking with you soon.
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