The U.S. Small Business Administration (SBA) has announced it will start accepting Paycheck Protection Program (PPP) loan forgiveness applications starting Aug. 10.
The SBA issued new loan forgiveness applications in June. You can read more about the two application options and access them in our previous article.
Borrowers are tasked with preparing the forgiveness application and submitting it to their lender. Borrowers also are responsible for calculating the specific forgiveness amount.
Lenders have 60 days to “perform a good-faith review, in a reasonable time, of the borrowers’ calculations and supporting documents” and to submit a decision to the SBA. If a lender identifies errors or other issues, it should work with the borrower to remedy the situation before it goes to the SBA.
The SBA then has up to 90 days to process the application and remit to the lender the appropriate forgiveness amount, with interest through the date of payment. If any amount remains unforgiven, the borrower begins equal monthly payments of principal and interest.
The SBA has previously stated it intends to automatically review all loans over $2 million but it may also review loans of any size at its discretion. The review may include eligibility as well as the forgiveness request. If the SBA decides to review a loan, it will notify the lender, and the lender must notify the borrower within five business days. The lender must submit certain additional information to the SBA as requested.
Borrowers do not have to rush to get their applications completed. The deadline for borrowers remains 10 months after the borrower’s chosen covered period ends (either 8 or 24 weeks after loan disbursement), after which the funds become a loan that must be repaid. If a borrower submits a forgiveness application within those 10 months, they may continue to defer payments until the SBA either forgives some or all of the loan or denies it.
Whether or not you submit your loan application in August, it’s still a good idea to start getting your documentation in order. Check out our previous article for tips for getting ready for the forgiveness application process.