Guidelines for seeking PPP loan forgiveness changes
WASHINGTON (CBS19 NEWS) -- Some businesses looking to get forgiveness for their Paycheck Protection Program funding will see some changes to the process.
The Small Business Administration recently announced some changes to the process for borrowers that were denied either partial or full forgiveness.
According to a release, there were few options for borrowers to seek redress if their lender determined they could not receive full forgiveness for the PPP loans before these new guidelines were issued.
Loan recipients have expressed frustration when lenders determined they were not eligible for forgiveness based, many times, on errors from the lender when the amount was approved.
Under the new guidelines, SBA is letting borrowers request the agency review, via their lenders, any time the amount forgiven is less than the amount approved.
The release says this is in addition to prior guidance reserving the right to review any PPP loan, regardless of its size.
It also states that lenders should not inform borrowers that the SBA has disapproved full forgiveness when the agency has not yet made such a determination.
Additionally, the lender will now be required to notify borrowers that they have 30 calendar days to ask for a complete review of the lender’s determination in cases where forgiveness is less than the amount of the loan.
The release says lenders must provide borrowers with written reasons for why a loan was not forgiven in full.
Until an appeal is reviewed by the SBA, the borrower has to continue to make payments on the outstanding balance.
The SBA also warns borrowers that a review could result in the agency reducing the amount of forgiveness or determining that none of the amount should be forgiven.
In such an instance, lenders are encouraged to work with borrowers to make sure the resulting balance is repaid, and if the amount increased, to work with borrowers to get a revised forgiveness application to resolve any agency-evidenced issues.
All this means borrowers can now seek redress when a PPP forgiveness amount was less than the loan amount, but they should only do so when they have good proof that the lender erred in its review process.