Attention all borrowers under the Paycheck Protection Program (PPP)! By now, you are likely nearing the end of the 8–week covered period, or are in the midst of the 24-week covered period, and are trying to decide when is the best time to complete and submit a loan forgiveness application to your lender. Additional guidance on the loan forgiveness process was issued this week. Here are a few items for your consideration:
- While the Loan Forgiveness Applications are available for borrowers to begin completion, lenders have not yet begun to accept applications. The SBA plans to roll-out a new platform for submitting these applications on August 10, 2020, which date is subject to extension if any new legislative amendments to the forgiveness process necessitate changes to the system.
- A borrower may submit a Loan Forgiveness Application before the end of the 8-week or 24-week covered period, provided that the borrower has used all of the loan proceeds for which the borrower is requesting forgiveness and the borrower’s loan forgiveness application accounts for any salary reductions in excess of 25% for the full covered period.
- Providing an accurate calculation of the loan forgiveness amount is the responsibility of a borrower. Lenders will be responsible to confirm that the Loan Forgiveness Application contains the completed certifications, the necessary supporting documentation, and correct and complete calculations. If a lender identifies errors in a borrower’s calculations or material lack of substantiation in the borrower’s supporting documents, the lender will work with the borrower to remedy the issue.
- After evaluating the application, lenders will submit their decisions on forgiveness to the SBA with a determination in one of four categories: (i) approved in full; (ii) approved in part; (iii) denied; or (iv) denied without prejudice. After a review of the required supporting documentation and the lender’s recommendation, the SBA will make a determination as to the amount of forgiveness, if any.
- A borrower may appeal a decision of the SBA regarding loan forgiveness. The SBA intends to issue an interim final rule addressing this process shortly.
Our attorneys are familiar with the PPP and can answer your questions regarding next steps to help you navigate through the loan forgiveness application process. Please contact us at 215-887-0200 or by going to sogtlaw.com.