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    SBA Streamlines PPP Forgiveness Process for Small Loans, Drops Loan Necessity Forms

    The SBA and lenders originated over 11.7 million loans totaling nearly $800 billion in relief to over 8.5 million small businesses. Now they have made it easier to get forgiveness of PPP loans of $150,000 or less. The SBA has launched a portal to allow borrowers in this category to apply for forgiveness directly through the SBA, instead of through their lenders. Ninety percent of loans fit this criterion, but nearly 7 million of those loans have yet to be forgiven, the SBA noted.

    The new Direct Forgiveness Portal began accepting applications on August 4th. The catch? Lenders have to opt-in for their borrowers to use the portal. The good news is that, so far, over 600 banks have opted into direct forgiveness, enabling over 2.17 million borrowers to apply through the portal. News reports, however, say that some big banks are not opting in and will continue their  loan forgiveness procedures.

    The Forgiveness Process

    After a borrower registers, the portal allows taxpayers to look up their loan, and loan information is automatically populated into the forgiveness application. A User Guide explains the process. The applicant must provide responses to a few questions, such as gross receipts for 2019 and 2020, the number of employees when the borrower applied for the loan and at the time of the forgiveness request, and the amount of the loan spent on payroll. Some second draw loans may require limited document submissions.

    Once the application is submitted, borrowers can follow the status through the portal. Approval of the application will be confirmed in a letter on the portal. Borrowers must retain employment records for four years after submission of the forgiveness application. For loans over $150,000, employment records must be retained for six years from the date the loan is forgiven or repaid in full.

    Loan Necessity Requirements Dropped

    In updated FAQs, the SBA indicated that it removed the requirement that borrowers with loans over $2 million had to submit a Loan Necessity Questionnaire, either SBA Form 3509 (for-profits) or Form 3510 (non-profits). Last Fall, the AICPA sent a letter to SBA calling for the suspension of the questionnaires because they required “extensive, burdensome documentation.”

    In all, SBA received 61 public comments regarding the Loan Necessity Questionnaires, and the majority of the comments raised objections. Based on the results of loan reviews, the SBA says it believes audit resources will be more efficiently “deployed across all loans” if the questionnaires are discontinued. SBA explains that the loan necessity reviews have caused delays beyond the 90-day statutory timeline for forgiveness, thus negatively impacting those borrowers that made their loan necessity certification in good faith. For these reasons, SBA is discontinuing any reliance on the Loan Necessity Questionnaires.

    PPP Stats

    As previously mentioned, the SBA and lenders originated over 11.7 million loans totaling nearly $800 billion in relief to over 8.5 million small businesses. In 2021:

    • SBA approved over 6.5 million loans totaling over $275 billion.
    • The average loan size was approximately $42,000 (compared to $101,000 in 2020)
    • 96% of loans went to businesses with fewer than 20 employees (compared to 87% in 2020).
    • 32% of loans went to businesses in low- and moderate-income communities (compared to just 24% in 2020)


    SBA continues to listen to borrowers and adjust its PPP program accordingly. The agency’s latest adjustments should make the forgiveness process quicker and easier, allowing businesses to focus on their operations instead of complicated government compliance procedures.

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