PPP Update: SBA Launching Direct Loan Forgiveness Portal
Last week, the SBA announced plans to open a “PPP direct forgiveness” portal which will allow borrowers to apply for PPP loan forgiveness directly, eliminating the need to go through their lenders. The new portal, which opens this Wednesday, August 4, is limited to loans up to $150,000, only from participating lenders.
The SBA will be issuing an updated list of lenders participating in the direct forgiveness program. If your lender is a participant, you can apply for forgiveness through the portal through a convenient process comparable to the questions asked on SBA form 3508S. Borrowers whose lenders are not participating must apply through them and should contact their lender reps for further guidance on how to submit their applications.
Some other important considerations to keep in mind regarding PPP loan forgiveness:
PPP loan repayments – If a borrower does not apply for loan forgiveness, payments are deferred 10 months after the end of their 24-week covered period. So for a borrower whose PPP loan was issued in April 2020, the end of the deferral period could be as early as August 2021. This is not a deadline to qualify for forgiveness so much as a reminder that you should apply for forgiveness as soon as possible to avoid any unnecessary repayments of the PPP loan.
Forgiveness after payments are made – If the forgiveness amount remitted by SBA to the lender exceeds the remaining principal balance of the PPP loan (because the borrower made scheduled payments on the loan after the initial deferment period), the lender must remit the excess amount, including accrued interest, to the borrower.
Excess loan amount errors – A borrower may not receive loan forgiveness for any amount that exceeds the correct maximum loan amount permitted by statute for that borrower. This is true whether the excess loan amount was caused by borrower error or lender error.
As always, we will continue to monitor developments regarding the PPP program and all COVID-related efforts, and call attention to changes that may impact our clients. In the meantime, if you have any questions or need assistance, please feel free to contact your Weiss professional.
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