To loan is human, to forgive, divine
The US Small Business Association (SBA) now has a portal to allow borrowers with Paycheck Protection Program (PPP) loans of $150,000 or less to apply for forgiveness directly through the SBA.
This new change will help rush relief to over 6.5 million small businesses that have been hampered by a complex process. Companies were encouraged to take out loans with approved lenders if they used that money for wages to keep staff on during the pandemic recession in 2020. If they used the money for other purposes, such as capital expenditures like buildings and supplies, it would be a loan.
PPP loans are forgiven by the government by repaying the bank, credit union or other lender. In 2021 the average PPP loan was $42,000, compared to $101,000 in 2020.
"The SBA's new streamlined application portal will simplify forgiveness for millions of our smallest businesses — including many sole proprietors — who used funds from our Paycheck Protection Program loans to survive the pandemic," said Administrator Isabel Casillas Guzman. "The vast majority of businesses waiting for forgiveness have loans under $150,000. These entrepreneurs are busy running their businesses and are challenged by an overly complicated forgiveness process. We need to deliver forgiveness more efficiently so they can get back to enlivening our Main Streets, sustaining our neighborhoods and fueling our nation's economy."
The new platform will begin accepting applications from borrowers on Aug. 4, 2021.
Lenders must opt-in to this program through Direct Forgiveness. Over 600 banks have opted in to direct forgiveness, enabling over 2.17 million borrowers to apply through the portal (This represents 30% of loans of $150,000 or less that have not yet submitted for forgiveness)
The SBA has also hired a PPP customer service team to answer questions by phone and text at 877-552-2692, Monday to Friday, 8 a.m. to 8 p.m. EST.
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