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New GAO report details PPP loan forgiveness obstacles, recommendations
The Government Accountability Office (GAO) released a report Monday detailing findings from a review of the Small Business Administration's (SBA) paycheck protection program (PPP) and loan forgiveness process. Previously, NAFCU responded to the GAO's questions on the program's loan forgiveness process and is listed in the report as an organization interviewed.
The report noted that SBA officials are working with a contractor to conduct review of loans over $2 million by using an automated review tool followed by additional manual reviews based on the initial findings. In addition, a separate and independent contractor will provide a quality assurance review on a sample of loans.
According to the SBA, all loans – including those under $2 million – will undergo an automated review to flag questionable loans and some manual review if necessary to verify eligibility, loan amount, allowable uses, and forgiveness amount.
The GAO maintained its prior recommendation that the SBA develop and implement plans to identify and respond to risks in the program – including fraud risks and improper payments. The GAO in June released a report to Congress which included this recommendation along with an outline of ways to improve the PPP. Currently, the SBA is finalizing its oversight plans.
In the report, the GAO noted that the extent of “good-faith review” required by the lender is unclear and this uncertainty about the lender’s role in the process, as well as the complexity of the process, could result in additional difficulties and delays for borrowers as they begin trying to obtain loan forgiveness.
The House Small Business Committee is expected to highlight concerns about the PPP loan forgiveness process in hearings this Thursday and Friday. Agency officials, as well as lenders and borrowers of the program, are scheduled to provide testimony; NAFCU will monitor both hearings.
NAFCU has consistently advocated for credit unions' ability to lend effectively through the program and has worked with the SBA to obtain additional guidance and relief for lenders through the application and loan forgiveness processes.