May 18, 2020

SBA releases application for PPP loan forgiveness

small businessThe Small Business Administration (SBA) Friday released an application for paycheck protection program (PPP) loan forgiveness and instructions for borrowers. NAFCU has urged the agency to release guidance on loan forgiveness since shortly after the program launched in April and as recently as Thursday as several credit unions have expressed concerns about the uncertainty of the forgiveness process.

The SBA has not released additional guidance for lenders on the loan forgiveness process.

In its release, the SBA said the form and instructions include efforts to reduce compliance burdens and simplify the process for borrowers, including:

  • options for borrowers to calculate payroll costs using an "alternative payroll covered period" that aligns with borrowers' regular payroll cycles;
  • flexibility to include eligible payroll and non-payroll expenses paid or incurred during the eight-week period after receiving their PPP loan;
  • step-by-step instructions on how to perform the calculations required by the CARES Act to confirm eligibility for loan forgiveness;
  • borrower-friendly implementation of statutory exemptions from loan forgiveness reduction based on rehiring by June 30; and
  • addition of a new exemption from the loan forgiveness reduction for borrowers who have made a good-faith, written offer to rehire workers that was declined.

In addition to the loan forgiveness application, the SBA last week issued two interim final rules related to the ability to increase certain PPP loans and the eligibility of certain electric cooperatives to apply for PPP loans. It also published updated FAQs to address questions related to the SBA's certification safe harbor and an extension to repay PPP loans until May 18. 

The House Small Business Committee last week also held virtual forums with PPP stakeholders and SBA Inspector General Mike Ware. During the forum with Ware, lawmakers raised concerns about the PPP's rollout, certain stipulations not mandated by Congress (such as the requirement that at least 75 percent of the PPP loan forgivable amount must be used toward payroll), and the lack of guidance in certain areas, including prioritizing underserved communities or minority-owned businesses.

The Office of Inspector General recently released a report that identified areas that need more guidance and clarity, including prioritizing underserved markets, loan forgiveness and deferments, and loan registration.

NAFCU will continue working closely with the SBA, Treasury, and Congress to ensure credit unions can lend effectively through the PPP. Access NAFCU's PPP FAQs here; more information is also available on the SBA's and Treasury's websites.