The federal Small Business Administration is relieving banks of the work of reviewing applications for forgiveness of some government Paycheck Protection Program loans they made as part of 2020 COVID-19 relief efforts.
The policy change, which covers loans of $150,000 or less, is outlined in a recent post to the Federal Register, the government’s primary organ for disseminating information about official policy changes.
According to the government, 93 percent of PPP loans were for $150,000 or less.
Explaining its decision, the agency wrote: “Despite the implementation of the streamlined loan forgiveness application for borrowers with loans of $150,000 or less, many smaller PPP lenders continue to express concerns to SBA that they do not have the technology or human resources to develop efficient electronic loan forgiveness platforms to process the new streamlined loan forgiveness application.
“SBA has also become aware that because lenders are overwhelmed by the volume of PPP loans and are mindful of the statutory 60-day requirement for lenders to issue a forgiveness decision to SBA from receipt of the borrower’s loan forgiveness application, lenders are limiting when loan forgiveness applications are accepted from borrowers, creating uncertainty among borrowers that they are going to have to start making payments on their PPP loans while they are waiting for their lenders to accept and process their loan forgiveness applications.”
The Washington Post quoted Patrick Kelley, associate administrator for the SBA’s Office of Capital Access, as having said in a prepared statement: “This initiative will allow PPP borrowers to put their concerns of achieving full forgiveness behind them and focus on operating and growing their businesses again.”
The Post reported that at least one banking trade group, the Consumer Bankers Association, supported the rule change.
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