On January 19, the Small Business Administration (SBA) published an Interim Final Rule (IFR) that outlined loan forgiveness application requirements and review processes under the Paycheck Protection Program (PPP). It also released updated loan forgiveness applications: Forms 3508, 3508EZ, and 3508S. Form 3508S simplified the loan forgiveness application for PPP recipients who borrowed less than $150,000.
The IFR specified that although the SBA may review PPP loan applications “in its discretion,” it is the lender’s duty to review and make decisions regarding loan forgiveness applications. Once the lender renders a decision, it must inform the SBA within 60 days of receipt of the borrower’s completed application. The lender’s decision must include the reasons for its decision, along with the loan forgiveness amount approved or denied. A borrower may also be denied “without prejudice,” meaning the borrower submitted a loan forgiveness application while the borrower’s PPP loan application is pending a review by the SBA.
If a borrower’s application for loan forgiveness is denied without prejudice, the lender is required to notify the borrower in writing of the denial, including the reasons for the denial. The borrower may, within 30 days of receipt of the denial, request that the lender reevaluate its decision. However, if the SBA decides that the borrower is ineligible for a PPP loan, it will instruct the lender to deny the borrower’s application for loan forgiveness. These denials are not appealable. Accordingly, the SBA may also ask the borrower to repay any PPP balance currently outstanding.
On February 7, the House Committee on Small Business released a memo detailing proposed funding increases to the Payment Protection Program (PPP) as part of President Biden’s $1.9 trillion stimulus plan, entitled “The American Rescue Plan.” The memo seeks an increase of $7.25 billion to the PPP, which would bring the total funds committed to $813.7 billion. Additionally, the memo calls for $25 billion to create the Restaurant Revitalization Fund, a new SBA program that will assist restaurants, and $15 billion for the Targeted Economic Injury Disaster Loan (EIDL) Advance program, which addresses potential funding shortfalls and ensures that remaining eligible businesses can access the $10,000 EIDL grants.
House Democrats are hoping to pass the American Rescue Plan by the end of the month. On February 11, House Speaker Nancy Pelosi stated that she believes that the bill will be passed by the Senate and will be submitted to President Biden before the middle of March. Because the Democrats and Independents hold a 51 to 50 majority in the Senate—including the tiebreaker by Vice President Kamala Harris—this timeline may be possible to achieve, despite the opposition to the bill by multiple House and Senate Republicans.
Leave a Reply