The Small Business Association (SBA) has announced key PPP forgiveness changes to assist borrowers who were previously denied either partial or full forgiveness. These changes allow borrowers to request the SBA to review their loan forgiveness amounts via their lenders, whenever the amount forgiven is less than the approved amount. Additionally, lenders are now mandated to notify borrowers that they have a 30-day window to request an SBA review of the lender’s determination if loan forgiveness is less than the loan amount. However, borrowers are advised to tread carefully, as their review could result in a reduced forgiveness amount or even a determination that none of the amount should be forgiven. The new guidelines aim to offer redress for borrowers who believe their lender erred in the review process.
SBA Announces Changes to PPP Forgiveness Process
From Hampton Roads Small Business Development Center By Mike Austin
New Guidelines for Borrowers
The SBA announced some changes to the PPP forgiveness process for borrowers who were denied either partial or full forgiveness. Prior to the new guidelines, there were few options for borrowers to pursue redress if their lender determined that they could not receive full forgiveness for their PPP loan(s). Numerous network clients have expressed confusion and frustration when their lenders determined that they were not able to obtain full forgiveness, many times due to errors by the lender when the amount was approved.
Review Process for Borrowers
Under the new guidelines, the SBA is allowing borrowers to request the agency to review, via their lenders, any time the amount forgiven is less than the amount approved. This is in addition to the agency’s prior guidance that they reserved the right to review any PPP loan, regardless of the size of the loan. In addition, the new guidance states that lenders should not inform borrowers that the SBA had disapproved full forgiveness when the agency had not yet made that determination.
Appeal Process
Also, in cases where forgiveness is less than the amount of the loan, the lender will now be required to notify borrowers that they have 30 calendar days to request, via the lender, for the SBA to complete a review of the lender’s determination. In addition, as of the effective date, any loans for which partial forgiveness was received, lenders must notify borrowers that they too have 30 calendar days to appeal the lender’s decision. Furthermore, lenders are required to provide those borrowers with written reasons why their loan was not forgiven in full.
Risks and Adjustments
However, until the appeal is reviewed by the SBA, the borrower is required to continue to make payments on the outstanding balance. Also, the review request comes at some risk to borrowers because their review could result in the following:
– The SBA could reduce the amount of forgiveness, resulting in a larger loan balance
– The SBA could determine that none of the amount should be forgiven
In any instances where additional adjustments are made, lenders are advised/encouraged to work with borrowers to ensure that the resulting balance is repaid, and if the amount increases lenders are to work with borrowers to obtain a revised forgiveness application to resolve any agency-evidenced issues. If the SBA determines that the borrower owes less than originally determined, or none of that amount, then all overages must be returned to the borrower.
Seeking Redress
So, it is now possible for affected borrowers to seek redress from the SBA when their PPP forgiveness amount was less than the amount approved. However, it is recommended that they do so only when they have good proof that their lender erred in their review process.
Question & Answer
What changes has the SBA announced regarding PPP forgiveness?
The SBA has announced changes allowing borrowers to request a review of their loan forgiveness amounts when the forgiven amount is less than the approved amount.
How can borrowers request a review of their loan forgiveness amount?
Borrowers can request a review via their lenders whenever the amount forgiven is less than the approved amount.
What is the timeframe for borrowers to request an SBA review of their lender’s determination?
Borrowers have a 30-day window to request an SBA review of the lender’s determination if loan forgiveness is less than the loan amount.
What are the risks involved in requesting an SBA review of loan forgiveness?
The review could result in a reduced forgiveness amount or a determination that none of the amount should be forgiven.
