Friday, October 23, 2020

Where do we stand on PPP loan forgiveness?

At both the OBA’s Government Relations Council and OBA Board meetings this week, a question came up about PPP loan forgiveness and whether it is something Congress is going to address before the upcoming election.

“Probably not,” said the OBA’s chief lobbyist and government relations director, Adrian Beverage. “There are still those who want to guard against fraudulent applications and there is currently no provision that provides for an SBA or Treasury audit either before or after a decision has been made about forgiveness. Then there is the general chaos that’s been exacerbated by the death of Justice Ginsberg. We’d like to get it done, but I just don’t see it happening before Nov. 3.”

That being the case, the existing process crafted by Treasury and the SBA is the process lenders and borrowers need to use now. According to SBA officials, SBA had received about 56,000 loan forgiveness decisions from lenders as of Sept. 8, 2020.

The PPP loan forgiveness process involves three steps:

• First, the borrower must submit a complete loan forgiveness application and associated supporting documents to the lender. The date by which a borrower may apply for loan forgiveness varies. A forgiveness application can be submitted any time on or before the maturity date of the loan – including before the end of the 8- or 24-week covered period – IF the borrower has used all of the loan funds for which the borrower is requesting forgiveness.

• Second, you (the lender) must review the application and make its independent decision about the amount of proposed forgiveness. This decision is to be made no later than 60 days from receipt of a borrower’s complete forgiveness application.

• Finally, no later than 90 days from receipt of the lender’s decision on loan forgiveness, SBA must send its decision as to the appropriate (and ultimate) forgiveness amount to the lender.

Here is a helpful addendum on loan forgiveness, courtesy the American Bankers Association.