Numerous small businesses will soon go through a less difficult loan forgiveness application process after receiving funds from the Paycheck Protection Program to help them stay open during the COVID-19 pandemic.
The US Small Business Administration announced on July 28 that it is rolling out revised efforts that will allow small business owners with PPP loans of $150,000 or less to apply for loan forgiveness directly through the SBA rather than through their banks. There are now 7.8 million loans worth $385.4 billion left. inc reported.
The new initiative is an attempt to end one of the largest US government aid programs in history. Between April 2020 and May 2021, nearly $800 billion in forgivable credit was originated. Lenders still have a say in forgiving individual PPP loans as part of the loan forgiveness, but the SBA is working to shorten the time it takes banks to invest in the process.
The new change will help bring rapid relief to over 6.5 million of the smallest small businesses — the SBA Administrator’s priority since day one, the federal agency said via a press release. the The forgiveness platform is expected to begin accepting applications from borrowers on August 4.
Lenders who have originated loans are reportedly required to opt for direct forgiveness before borrowers can use the SBA’s online platform Wall Street Journal reported.
“The SBA’s new streamlined application portal will simplify forgiveness for millions of our smallest businesses – including many sole proprietors – who have used funds from our Paycheck Protection Program loan to survive the pandemic,” said Administrator Isabel Casillas Guzman. “The vast majority of companies waiting for forgiveness have loans below $150,000. Busy running their businesses, these entrepreneurs are challenged through an overly complicated forgiveness process. We need to deliver forgiveness more efficiently so they can revitalize our high streets, preserve our neighborhoods, and boost our country’s economy.”
Patrick Kelley, Deputy Administrator of the SBA’s Office of Capital Access said:
“This initiative will allow PPP borrowers to put their concerns about full forgiveness behind them and focus on getting back to business and growing their businesses. We are pleased to be able to assist financial institutions across the United States in processing small business levy applications.”
Kelley said eligible borrowers would receive an email from the SBA with a link to the online portal Wall Street Journal reported. The SBA set this up portal for borrowers and a customer service line at (877) 552-2692 to help answer questions about forgiveness requests.
The revised attempt at lending follows BLACK COMPANY Black or African-American borrowers reportedly received over $14 billion in PPP loans this year.
First launched in April 2020, PPP was originally intended to provide loans to the neediest small businesses struggling to cope with the COVID-19 pandemic. The PPP provides forgivable loans to small businesses to help pay workers’ wages, rent and other operating costs.
The program, which has helped companies secure over 11 million loans worth over $788 billion based on the latest data, has faced problems since its inception. Observers explained that larger companies received PPP loans the first time, despite having greater capital resources than smaller firms. They also reported that minority-owned companies had difficulty using PPP, especially in the early stages.
So far, there has been no formal statement as to whether lawmakers will approve additional funds for PPP or whether another round of funding will be set up.