A Newly Shortened Forgiveness Application Offers a Ray of Hope for Small Businesses. As many PPP loan participants know, the SBA’s application for loan forgiveness was extraordinarily (and many thought, unnecessarily) time-consuming and difficult to complete.
The new “EZ” loan forgiveness application is just three pages long and can be used by self-employed borrowers and businesses that didn’t significantly cut worker wages or salaries after taking out PPP loans.
“These changes will result in a more efficient process and make it easier for businesses to realize full forgiveness of their PPP loan,” the SBA and Treasury said in a formal statement.
The Paycheck Protection Program offers loans of up to $10 million each for payroll and overhead. PPP loans can be forgiven if borrowers show they spent their funds according to PPP guidelines and didn’t significantly reduce workforces or wages.
The Consumer Bankers Association and the Bank Policy Institute have also called for Congress to enact automatic forgiveness of PPP loans up to $150,000. That threshold would cover nearly 86% of all PPP loans but just over a quarter of all loan dollars. The groups argued in a letter to lawmakers earlier this month that doing so would save tens of millions of hours in borrower paperwork while costing the government only a minimal additional amount.
At a Wednesday hearing, the House Small Business Committee was again urged to consider automatic forgiveness for smaller PPP loans, with one Texas banker testifying that obtaining PPP loan forgiveness remains too difficult a process for many. “Even under the simplified applications that were issued this morning, they’re still quite onerous as far as documentation is concerned,” Eduardo Sosa, senior vice president of Commerce National Bank in Austin, told the committee. “I think a standard automatic forgiveness at $150,000 would be called for.”
Director of advocacy at the Center for Responsible Lending, Ashley Harrington, agreed, saying the new simplified application is still “incredibly burdensome for the really small businesses.” “We advocate for streamlined automatic forgiveness under $100,000,” Harrington said. “This will disproportionately serve the really small businesses. On average, these are businesses that will likely have 13 or fewer employees, the businesses that we really want to be able to survive and make it through this crisis.”