Feds Simplify Forgiveness Process on Small PPP Loans

Recently, the U.S. Treasury Department and the Small Business Administration (SBA) released a simplified forgiveness application for Paycheck Protection Program (PPP) loans under $50,000.

The simplified form cuts the application’s size down from five pages to two and removes most of the questions aimed at ensuring that the loans were used for the program’s intended purposes of supporting payrolls and covering other fixed costs.

The PPP, which was closed to new applicants in August, was established as part of the $2 trillion COVID-19 relief package enacted in March to speed loans to small businesses, including health care clinics, hurt by the pandemic. The program has relied on banks and other financial institutions to process and fund the loans, using a simplified SBA application form that skipped the usual due diligence lenders perform before lending.

The PPP instead delayed most of the paperwork until the forgiveness application, ensuring that the money got out quickly to those that needed it, but still making sure borrowers were not cheating the system. But small business groups and lenders complained that detailing how the emergency funds were spent would distract the smallest entrepreneurs from running their businesses or force them to hire accountants they cannot afford.

Support is building for legislation that would replace the forgiveness applications for loans under $150,000 with a single attestation from the borrower that the funds were used properly.  The bipartisan Paycheck Protection Small Business Forgiveness Act, S. 4117, introduced earlier this summer in the Senate may be part of another COVID-19 package considered by Congress before the end of the year.

After approving over five million loans totaling over $500 billion, SBA has begun approving PPP forgiveness applications.

  • To view the simpler loan forgiveness application, go here.

  • For instructions on how to fill out the form, click here.

John Falardeau is ACA senior vice president of public policy and advocacy.