It might be hard to believe, but it’s been a full two months since the Forgiveness phase of the Paycheck Protection Program began.
Like with Originations, PPP Forgiveness has proceeded through fits and starts due to the introduction of multiple Forgiveness applications and on-going stimulus negotiations in Congress which could further change the process for borrowers.
With that in mind, Forgiveness has remained rather opaque and difficult to benchmark.
However, with more than 250,000 PPP loans now on the Numerated Forgiveness Platform we feel we have a solid understanding of the status of Forgiveness and where the industry stands.
A look at some high-level data helps paint the picture.
PPP Forgiveness Submissions Slowed Following Announcement of Form 3508S
In terms of the number of Forgiveness applications we’ve seen started on our platform versus those that have been completed and submitted to the SBA, we saw momentum grow week over week. In fact, we saw about a 20 percent growth in apps submitted each week until we hit the week of Oct. 11—the week the SBA announced Form 3508S.
Form 3508S is a simplified PPP Forgiveness application that is aimed primarily at borrowers with PPP loans totaling $50,000 or less. The new form was officially launched in the SBA portal this week.
In the time since the announcement, we’ve seen many financial institutions advise qualifying borrowers to pause on their Forgiveness applications until they can file under this new form.
Still in the Early Innings of PPP Forgiveness
Of the more than a quarter of a million PPP loans on the Numerated Forgiveness platform, 11 percent of borrowers have started the Forgiveness process. Their progress is broken down into three phases: applications still being completed by borrowers, lenders reviewing borrowers’ applications, and submitted applications that are with the SBA awaiting response.
At this point in the Forgiveness process, a little less than a third of all started loans have been submitted to the SBA.
The SBA has Officially Started Reviewing and Responding to PPP Forgiveness Requests
While the SBA has been accepting Forgiveness applications for months, borrowers are just starting to receive responses on their applications over the last couple of weeks.
Of the Forgiveness applications that have been successfully submitted to the SBA, about 21 percent have been fully forgiven while another 79 percent require further review.
A Breakdown of SBA Responses Reveals PPP Forgiveness Trends
Now that the SBA has begun reviewing and responding to PPP Forgiveness applications, those responses reveal some trends among PPP borrowers and how they’re going about this final phase of the program.
Based on the responses we’ve seen, the overwhelming majority of fully-forgiven PPP loans were under $50,000—making them eligible for the new Form 3508S.
Also noteworthy is that an additional 20 percent of PPP loans fall into the range of $50,000 - $100,000. Taken together, it should come as no surprise that a full 96 percent of all PPP loans submitted and acted upon by the SBA so far have been submitted using Form 3508EZ.
A not insignificant number of PPP loans have come back with only partial forgiveness, creating what we call a Forgiveness Gap—or the remaining amount a business will be required to pay back. Of the Forgiveness Gaps we’ve identified, almost every one was caused due to conflicts with their EIDL Advance loan.
How to Keep a Pulse on PPP Forgiveness
The data above provides an important snapshot into the current state of PPP Forgiveness, but as we’ve learned the Program is an ever-changing animal.
It can be difficult to keep a pulse on Forgiveness when you don’t have access to data like we do out of the Numerated Forgiveness Platform.
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