Is your bank willing to sign up for the Small Business Administration Paycheck Protection Program portal forgiveness? This is the right question to ask if you are one of millions of small business owners that have yet to request loan forgiveness.
The SBA’s forgiveness portal was unveiled Wednesday. This technology platform allows borrowers who have $150,000-or less PPP loans–95 percent of the total loans in 2021-–to apply directly to the SBA for forgiveness. It will be available starting August 4. Borrowers can only request forgiveness from their lenders at the moment.
The SBA system will speed up your application and processing time. You’ll need to complete one of three forms depending on how large the loan is. Lenders have 60 days from the time they receive loan forgiveness requests. The SBA will then approve the loan forgiveness application and must send funds to the borrower within 90 days. However, if any discrepancies are found the borrower might need additional documentation. The lender will then inform borrowers about the amount of loan forgiveness. The portal allows you to complete all this digitally in just 72 hours.
“The SBA’s new streamlined application portal will simplify forgiveness for millions of our smallest businesses–including many sole proprietors–who used funds from our Paycheck Protection Program loans to survive the pandemic,” SBA Administrator Isabel Guzman said in a statement. We need to make forgiveness easier so that they can return to revitalizing Main Streets and sustaining neighborhoods, as well as fueling the nation’s economy.
But only if you bank participates. To access the platform, individual lenders must opt in. It’s not clear yet if many banks will opt in.
The SBA released a statement stating that over 600 banks have already signed up, which allows more than 2.17 millions borrowers to use the portal. Nearly 5,500 lenders took part in the PPP. According to the SBA, nearly 5,500 lenders participated in the PPP.
Getting the remaining institutions–particularly those that already offer their own forgiveness portals–to sign on will be a significant hurdle, says Dan O’Malley, CEO of Numerated, a Boston-based digital lending platform for banks. Numerated supports the use of technology to accelerate processing, which is what Numerated does with its customers, but he isn’t convinced lenders will embrace the SBA portal.
O’Malley states that there are two main reasons not to use the SBA portal. The first is that you lose control over the customer experience. Do you prefer a customer to contact the SBA after they have completed the application? He also said that it might be difficult for banks to use the SBA portal while managing their systems.
Forgiveness applications over $150,000 will need to be processed by lenders. They will still be responsible for the final forgiveness decision on loans below $150,000. He says that lenders would need to access the SBA system and read the loans applications of borrowers. It splits your efforts and can be a bit confusing.
O’Malley states that although the final interim rule regarding direct forgiveness was released on Wednesday, some lenders might still be considering it. According to O’Malley, around half the 120 clients of PPP lending said that they would like to see the IFR before taking a decision.
However, at least one lender wants to boast its involvement in the program. Phoenixville’s Customers Bank, Pennsylvania, is currently the most prominent PPP lender. It has more than 320,000 PPP loans totaling $9.6 million. Sam Sidhu (CEO and President of the bank), says that this platform gives borrowers more certainty about receiving forgiveness from the PPP.
Sidhu knows that there is confusion when a borrower asks for a new platform. He notes that those who had previously requested loan forgiveness from Customers might be uncomfortable with the idea of switching to a new system.
Sidhu states that there are “definitely some questions about the added complexity.” He adds, “The fact it’s going really fast on a government platforms that’s expected be very intuitive, hopefully very quick… That’s a good enough experience… If we can facilitate seamless forgiveness, that will really help solidify their standing in our eyes.”
Publiated at Wed 28 July 2021 23.23:34 +0000