Recently, the Small Business Administration (SBA) issued guidance regarding loan forgiveness for the Paycheck Protection Program (PPP). In its guidance, the SBA details the PPP loan forgiveness process and reiterates certain rules and requirements for PPP loan forgiveness. We discussed the PPP loan forgiveness rules and requirements in a prior post, available here. Below is a brief overview of the PPP loan forgiveness process.
First, borrowers must submit a PPP loan forgiveness application (i.e., SBA Form 3508, SBA Form 3508EZ or a lender equivalent form) to the lender. Borrowers may submit a PPP loan forgiveness application as soon as: (1) the borrower has spent all the PPP funds it received for proper purposes, and (2) the lender will accept PPP loan forgiveness applications.
Second, the lender will review the forgiveness application and determine whether the borrower is eligible for PPP loan forgiveness. The lender then submits its assessment/recommendation to the SBA within sixty (60) days of receiving the PPP loan forgiveness application from the borrower. The web portal for the lender to submit its recommendation to the SBA opens on August 10, 2020. The SBA’s guidance details how lenders may utilize the web portal to submit its review and recommendation to the SBA.
Third, the SBA reviews the lender’s determination and decides whether to remit the loan forgiveness amount or not. The SBA is required to review each lender’s determination and make a remittance decision within ninety (90) days of receiving the application from the lender.
Fourth, once the lender receives a decision from the SBA, the lender will notify the borrower of the SBA’s remittance decision and the remittance amount, if applicable. The lender will also notify the borrower of the date on which the borrower’s first payment is due, if applicable. In total, the process can take up to one-hundred-fifty (150) days.
Note that certain events may result in a longer PPP loan forgiveness process. For example, an SBA audit could delay and interfere with the PPP loan forgiveness process. As discussed in our prior post, the SBA may perform an audit of any entity they deem necessary. Additionally, should the borrower dispute the SBA’s remittance/forgiveness decision, an appeal process will be available to the the borrower. While the SBA has not specifically detailed the PPP loan forgiveness appeals process, the SBA’s guidance does provide that it intends to address the appeals process in an interim final rule, shortly.
For any questions regarding the PPP loan forgiveness process, please contact your regular HLP attorney, or Partners@thehlp.com, or call (212) 734-0128 or (248) 996-8510.