Photo courtesy of Fashion Frameworks
In an effort to accelerate the end of the infamous $1 trillion Paycheck Protection Program, the Small Business Administration is now focusing on making the forgiveness process easier. The PPP ran out of money within a month, though it did issue nearly $800 billion in forgivable loans, and failed to aid the country’s small businesses who needed funds the most; the program suffered continuous bureaucratic snags before it became especially prone to fraud. Now, however, attention is being refocused elsewhere.
The SBA plans to outline a new initiative that will encourage borrowers with loans of up to $150,000 to apply for loan forgiveness; this would encompass over 90% of the program. The ability to convert these loans into grants in exchange for maintaining payroll had always been a key facet of the program’s goal. As of now, however, over 7 million of these loans have yet to be forgiven.
The SBA will be setting up its own online forgiveness platform designed to be consumer-facing. With this new setup, banks will no longer be responsible for processing forgiveness requests. Instead, borrowers will apply directly in a format that officials reportedly estimate “will take businesses just a few minutes to go through.”
In addition, the SBA also plans to spare borrowers who received second loans, worth less than $150,000, from having to supply documentation proving that they “suffered a 25 percent revenue reduction in 2020,” which was required in order to receive the aid. Instead, the SBA will be using data sets to make such determinations, which includes foot traffic and credit card charge information.
In a statement made by SBA Associate Administrator Patrick Kelley at a webinar Tuesday, he urged lenders to “opt in to the SBA’s new forgiveness platform by giving it over to the government and getting your life back.” Additionally, Kelley stated that “all of us want to be done with forgiveness — borrowers, lenders, government — by the fall, across the board, so this is the final push that will hopefully put PPP in the rearview mirror for the borrowers, for the lenders and for the agency.”
The SBA plans to launch said platform today, on a pilot basis, and have it go live sometime around August 4th.
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