Small business owners who have been waiting to have their Paycheck Protection Program (PPP) loan forgiven can breathe a sigh of relief.
The U.S. Department of Treasury said Tuesday (Sept. 29) it would soon begin forgiving loans granted under the PPP after borrowers and lenders complained that the Small Business Administration (SBA), the program’s manager, and Treasury employees have failed to respond to forgiveness requests, according to The Wall Street Journal (WSJ).
The newspaper reported a Treasury spokesperson said it expects to approve forgiveness requests by late this week or early next. Most loans are expected to be approved quickly, while those in excess of $2 million will get added scrutiny, Treasury said.
“The ultimate success of the program will depend on forgiveness, so small business owners are eager to learn of [Treasury officials’] decisions,” said Kevin Kuhlman, senior director of government relations for the National Federation of Independent Business (NFIB), the Nashville, Tennessee-based small business trade association.
On Sunday (Sept. 27), Politico reported not a single loan had been forgiven under the massive federal program, as employers feared they could be on the hook for the money.
Under the measure, small businesses were promised loan forgiveness as long as the 60 percent of the money used toward payroll and 40 percent to other allowable expenses. Banks blamed the SBA and Treasury for a lack of communication on how to proceed.
William Manger, SBA’s chief of staff and associate administrator, told House lawmakers last week that it has received 96,000 forgiveness applications, about 2 percent of the total loans, but none have been approved or denied. The applications represent about 2 percent of the more than 5 million loans, worth $525 billion, issued under the program.
Since the PPP expired in August, $130 billion has yet to be distributed, the WSJ reported. Congress has not determined how the remaining funds should be allocated.
Lawmakers have introduced legislation to ease forgiveness for PPP loans of less than $150,000, the WSJ reported.
“It is actually more complicated than any of us even thought,” said Jack Murphy, president of business banking at Citizens Financial Group, at a conference Tuesday of the Consumer Bankers Association. “It’s taking us two weeks to process an application. Four to six contacts between small business owners … and the folks that are trying to process the forgiveness applications.”
Treasury Secretary Steven Mnuchin encouraged business owners to request forgiveness if they have used the funds.
A recent survey by the NFIB revealed one in five small businesses said they would have to shut down by March if economic conditions don’t improve. The poll of PPP borrowers said 84 percent have used the entirety of loans they received earlier while 44 percent said they would apply or reapply for a second PPP loan if one becomes available.