As banks and credit unions work to disburse the last of the available Paycheck Protection Program funds, the SBA and Treasury Department are getting financial institutions ready for the next phase of the program: forgiveness.
That is, of course, a long-winded way of saying that the government has issued new guidance around PPP forgiveness, specifically the SBA.
Last Friday, the SBA issued two new pieces of guidance in the form of an Interim Final Rule on Forgiveness and an Interim Final Rule on Loan Reviews. The guidance has clarifications to the timing and information required to submit a loan for forgiveness.
As always, our team is continuing their work of breaking down this guidance to make it easier for our banks and credit unions to digest:
Decision Timing: Lenders have 60 days to make a decision after borrowers have submitted their forgiveness application and documentation. The SBA then has 90 days to remit payment to lenders. No guidance was provided, however, for how a lender’s Forgiveness decisions should be submitted to the SBA.
Notice of Denials: Lenders must provide notice to borrowers if their forgiveness application is denied. Numerated’s forgiveness solution provides a report of denied requests to assist lenders in communicating denial decisions.
SBA Review Process: The SBA can review a PPP loan at their discretion, and at any time up to 6 years from when the loan is forgiven or repaid in full. If a review is initiated prior to a forgiveness decision, lenders are not allowed to approve a forgiveness request until the SBA completes its review.
SBA Review Requirements: In a review scenario, among other things, the SBA will require the borrower to provide their Schedule A Worksheet. We will be communicating this potential to all borrowers and encouraging those with loans above $2 million to proactively submit their workbooks when they apply.No guidance was provided for how a lender should submit the required information at the time of an SBA Review.
In support of the above requirements, Numerated’s forgiveness solution will direct borrowers to a spreadsheet they can download and use for their Schedule A Workbook. We will not require borrowers to use it, as we expect many will use materials provided by their payroll providers or CPAs.
We will continue to do our best to provide helpful information as new guidance is issued and becomes available. In the meantime, you can find more information on the PPP by reading our PPP Lending FAQ and PPP Forgiveness FAQ.