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SBA announces simpler PPP forgiveness for loans $50K or less

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The Small Business Administration on Thursday announced it had started approving Paycheck Protection Program loan forgiveness applications and had eased the process for small-dollar borrowers.

A “simpler loan forgiveness application” now exists for small businesses who borrowed $50,000 or less under the popular COVID-19 economic relief measure, the SBA said.

The agency said it and the Treasury Department also “eased the burden on PPP lenders, allowing lenders to process forgiveness applications more swiftly.”

“The PPP has provided 5.2 million loans worth $525 billion to American small businesses, providing critical economic relief and supporting more than 51 million jobs,” Treasury Secretary Steven Mnuchin said in a statement. “Today’s action streamlines the forgiveness process for PPP borrowers with loans of $50,000 or less and thousands of PPP lenders who worked around the clock to process loans quickly.”

Earlier this year, Repairer Driven News analyzed PPP recipients in the “Automotive Body, Paint, and Interior Repair and Maintenance” segment through June 30.

Our research found 19,681 facilities received between approximately $1.25 billion and $2.06 billion combined and might have protected at least 133,000 jobs in the industry. (Some of the employee data was incomplete.)

Nearly 60.1 percent of those companies borrowed $50,000 or less in PPP loan applications, potentially protecting at least 33,929 employees.

“Nothing will stop the Trump Administration from supporting great American businesses and our great American workers,” SBA Administrator Jovita Carranza said in a statement. “The Paycheck Protection Program has been an overwhelming success and served as a historic lifeline to America’s hurting small businesses and tens of millions of workers. The new form introduced today demonstrates our relentless commitment to using every tool in our toolbelt to help small businesses and the banks that have participated in this program. We are continuing to ensure that small businesses are supported as they recover.”

Scores of business groups –including the Society of Collision Repair Specialists, SEMA and Auto Care Association have sought a simplified loan forgiveness process.

However, one of the associations in that effort warned that the process announced Thursday still would be unduly burdensome for small businesses.

“While we appreciate SBA and Treasury attempting to streamline the forgiveness process, it is apparent Congressional action is needed for the true streamlined forgiveness mom-and-pop businesses need,” Consumer Bankers Association CEO Richard Hunt said in a statement Thursday. “This newest process still requires a significant investment of time and resources from small business owners – resources which could be better spent paying their employees and supporting local economies.”

“Congress can solve this problem tomorrow and inject the equivalent of $7 billion into our economy by passing bipartisan, common-sense legislation to streamline PPP forgiveness for small businesses on Main Street in communities across the country.”

Instead, those groups are pushing for Senate Bill 4117, which would forgive PPP loans through $150,000 with what the CBA called “a simple, one-question attestation.” The measure now has more than 30 sponsors and bipartisan support. A companion House Bill 7777 has more than 100 sponsors and bipartisan support.

Under S. 4117, $150,000-and-less borrowers would merely need to submit a “one-page online or paper form, to be established by the Administrator not later than 7 days after the date of enactment of this subsection, that attests that the eligible recipient complied with the requirements under section 7(a)(36) of the Small Business Act (15 U.S.C. 636(a)(36)).”

Banks wouldn’t be held responsible for any small businesses who lied on the form. The government could only pursue enforcement against recipients if the business “commits fraud or expends covered loan proceeds on expenses that are not allowable under section 7(a)(36)(F) of the Small Business Act (15 7U.S.C. 636(a)(36)(F)),” according to the bill.

Mnuchin said he wasn’t opposed to something even easier than what his agency and SBA had offered now.

“We are committed to making the PPP forgiveness process as simple as possible while also protecting against fraud and misuse of funds,” he said in a statement. “We continue to favor additional legislation to further simplify the forgiveness process.”

Research by AQN Strategies has found society would come out ahead if all loans $150,000 and under were forgiven — even if some of the recipients should have paid back some money.

AQN mentioned the complexity of the 11-page document released by the Small Business Administration on May 15.

The SBA has since split that file into a five-page form (like the original, one page is optional) and seven pages of instructions.

AQN pointed out that a form like the original cost the small business $2,000-$4,000 in time or third-party expense and causes banks to lose money when smaller-dollar loans mature.

However, the government in mid-June released an “EZ” version involving a three-page form (one page is optional) and four pages of instructions.

S. 4117 co-sponsor Sen. Kevin Cramer, R-N.D., estimated June 30 a forgiveness application for a $150,000-or-less loan would cost the business $2,000 and the bank $500. He forecast banks as a whole could save nearly $2 billion and eligible small businesses could save $7.4 billion under his bill.

The 3508S form for borrowers of $50,000 or less is one page plus the second optional page of demographic questions. It’s accompanied by three pages of directions.

In other COVID-19 economic relief news, Republican President Donald Trump on Friday touted relief negotiations — even though he’d just called them off Tuesday.

More information:

Paycheck Protection Program frequently asked questions

Small Business Administration, Oct. 7, 2020

PPP 3508S forgiveness application for loans $50,000 or less

SBA, Oct. 8, 2020

PPP 3508S $50,000-and-less forgiveness application

SBA, Oct. 8, 2020

Paycheck Protection Program loan forgiveness application

SBA, June 16, 2020

PPP forgiveness application instructions

SBA, June 16, 2020

PPP “EZ” loan forgiveness application

SBA, June 16, 2020

PPP “EZ” form instructions

Images:

Small Business Administration Administrator Jovita Carranza is shown. (Provided by SBA)

Treasury Secretary Steven Mnuchin. (Provided by Treasury Department)

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