SBA proposes changes to PPP forgiveness

The Small Business Administration (SBA) has announced plans to make it easier for businesses that received funds from the Paycheck Protection Program (PPP) to have their emergency loans forgiven.

The new initiative will encourage borrowers with loans of $150,000 or less — accounting for more than 90% of recipients — 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. To date, nearly 7 million of those loans have not been forgiven.

Not only does this move make it easier for small businesses to obtain the full benefit of the program, it expedites the process to wind down one of the government's biggest and most popular COVID relief programs, which issued nearly $800 billion in forgivable loans from April of last year through May 2021.

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 which will accept applications from small borrowers directly in order 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% revenue reduction in 2020.  The SBA plans to launch the site in early August.