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SBA to Revamp PPP Forgiveness

Wednesday, August 4, 2021

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The Small Business Administration recently announced a new initiative aimed at encouraging borrowers with Paycheck Protection Program loans of $150,000 or less to apply for loan forgiveness.

With borrowers within that loan bracket reported to make up more than 90% of all distributed loans during the pandemic-era program, the SBA has launched what it's calling a streamlined application portal for borrowers to apply for forgiveness directly through the SBA, instead of their participating lender.

“The SBA’s new streamlined application portal will simplify forgiveness for millions of our smallest businesses—including many sole proprietors—who used funds from our Paycheck Protection Program loans to survive the pandemic,” said Administrator Isabel Casillas Guzman. “The vast majority of businesses waiting for forgiveness have loans under $150,000. These entrepreneurs are busy running their businesses and are challenged by an overly complicated forgiveness process. We need to deliver forgiveness more efficiently so they can get back to enlivening our Main Streets, sustaining our neighborhoods and fueling our nation’s economy.”

The change in forgiveness application is slated to help rush relief to over 6.5 million smallest of small businesses. According to reports, the SBA issued nearly $800 billion in forgivable loans from April of last year through this May.

How it works is that through the SBA’s forgiveness site, borrowers will be able to submit applications directly into a format that officials estimate will take businesses just minutes to go through. While lenders will still have a say in whether individual PPP loans should be forgiven, the intent is to reduce the amount of time and effort that banks have been investing into the process.

mphillips007 / Getty Images

The Small Business Administration recently announced a new initiative aimed at encouraging borrowers with Paycheck Protection Program loans of $150,000 or less to apply for loan forgiveness.

Although, the SBA has also reported its plans to spare certain borrowers who received second PPP loans this year worth less than $150,000 from having to supply documentation proving that they suffered a 25% revenue reduction in 2020 that was required to receive the aid.

Instead, the Administration plans to use a combination of data sets to make the determinations, including information based on foot traffic and credit card charging.

The new forgiveness platform will begin accepting applications from borrowers today, Aug. 4.  Lenders are required to opt-in to this program by visiting

In addition to the new platform, the SBA has also set up a new PPP customer service team to answer questions and directly assist borrowers with their forgiveness applications. Borrowers that need assistance or have questions should call 877-552-2692, Monday – Friday, 8 a.m. - 8 p.m. EST.

“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,” said Patrick Kelley, Associate Administrator for SBA’s Office of Capital Access. “We are pleased to be able to assist financial institutions across the U.S. in processing forgiveness applications for small business owners.”

About PPP, Previous Announcements

Established by the CARES Act in 2020, the PPP was among the first COVID-19 small business economic aid programs and provided more than $798 billion in economic relief to small businesses and nonprofits across the nation, keeping employees working, and helping businesses come back stronger than ever.

After a year of issuing aid, in March of this year the SBA released new guidance regarding revisions made to the Paycheck Protection Program that intends to make access to the PPP loans more equitable.

The final rule arrived after President Joe Biden announced that his administration would be giving businesses with fewer than 20 employees and sole proprietors exclusive access to the portal from Feb. 24 through March 9.

According to the SBA, the final rule:

  • Allows for individuals who file an IRS Form 1040, Schedule C to calculate their maximum loan amount using gross income;
  • Removes the eligibility restriction that prevents businesses with owners who have non-financial fraud felony convictions in the last year from obtaining PPP loans, and;
  • Removes the eligibility restriction that prevents businesses with owners who are delinquent or in default on their Federal student loans from obtaining PPP loans.

Through the establishment of the new rule, the Biden Administration envisions that lenders and community partners will have more time to work with the smallest businesses to submit their applications, while also ensuring that larger PPP-eligible businesses have time to apply for and receive support before the program expires at the end of the month.

Other changes to the program included:

  • Allow sole proprietors, independent contractors, and self-employed individuals to receive more financial support by revising the PPP’s funding formula for these categories of applicants;
  • Eliminate an exclusionary restriction on PPP access for small business owners with prior non-fraud felony convictions, consistent with a bipartisan congressional proposal;
  • Eliminate PPP access restrictions on small business owners who have struggled to make student loan payments by eliminating student loan debt delinquency as a disqualifier to participating in the PPP; and
  • Ensure access for non-citizen small business owners who are lawful U.S. residents by clarifying that they may use Individual Taxpayer Identification Number (ITIN) to apply for the PPP.

However, despite these changes, borrowers who have already been approved for additional PPP loans can’t increase their loan amounts using the new formula. Although, the SBA said that it would consider reviewing first-time PPP borrowers who calculated their loan amounts using gross income of more than $150,000.

Two months later, in May, the second round of the PPP program came to an end, a collection of news sources were reminding small business borrowers to apply for loan forgiveness, although PPP forgiveness is not a guarantee.

At the time, whether a business was applying for either the PPP Draw 1, PPP Draw 2 or both loans, the terms of the loan(s) were relatively the same, requiring that eligible borrowers who qualify for full loan forgiveness should have carried out the following over the eight- to 24-week period upon receiving the loan:

  • Maintained employee staffing and compensation levels (in PPP Draw 2, having maintained the compensation levels the same as in PPP Draw 1);
  • Spent the loan proceeds on payroll costs and other eligible expenses (40%); and
  • Used at least 60% of the loan for covering payroll costs.

Although should a business fall short of the guideline, partial forgiveness could be an option.

To simply the process of applying, the American Institute of Certified Public Accountants has created a free online platform, Once the form has been completed, the lender has 60 days to review the application and submit it to the SBA, which has 90 days to make a decision regarding forgiveness.

Last month, the SBA announced that it was eliminating the Loan Necessity Questionnaire for PPP loans of $2 million or greater. The notice also declared that any questionnaires previously requested are no longer required and that any loans with an open request for additional information should be closed and resubmitted.


Tagged categories: Business management; Business matters; Business operations; COVID-19; Finance; Funding; Government; NA; North America; Program/Project Management; Small Business Administration

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