On July 23, 2020, the SBA issued a Procedural Notice to Paycheck Protection Program (PPP) lenders that addresses the procedures for lenders to submit PPP loan forgiveness decisions to the SBA.
The forgiveness process could take up to 150 days after a borrower submits its complete Loan Forgiveness Application (LFA) to its lender. The process outlined below highlights various scenarios borrowers may encounter in the forgiveness process, including partial approvals of the requested forgiveness amount and denials. As described below, PPP lenders will gain access to an online Forgiveness Platform on August 10, 2020.
Steps for Loan Forgiveness:
See our previous article on these rules here.
The lender's decision to the SBA can be an: approval (in whole or in part); denial; or (if directed by SBA) a denial without prejudice in cases where the SBA's review of the loan is pending (reminder: the SBA may review PPP loans of any size at any time at its discretion and lender must notify borrower when this occurs).
If the lender denies a borrower's LFA in full, the lender must notify the borrower that they issued a decision to the SBA denying the application – within 30 days of receiving that notice from a lender; a borrower may notify the lender that it requests the SBA to review the lender's decision and the lender must notify the SBA of such request within five days of receiving the request from borrower. The SBA may deny this request for review. If the SBA accepts the borrower's review request, the SBA will notify the borrower and the lender of the results of their review.
PPP Forgiveness Platform:
If the forgiveness amount paid by the SBA to the lender is less than the amount in the forgiveness decision issued by the lender to the SBA, the lender must also notify the borrower of the amount in the lender's forgiveness decision.
If only a portion of the loan is forgiven or if the forgiveness request is denied, any remaining balance due on the loan must be repaid by the borrower on or before the loan's maturity.
If the SBA determines that a borrower was not eligible for a PPP loan or was not eligible for the loan amount or the forgiveness amount requested, the lender will request additional information from the borrower to provide to the SBA.
Borrowers may appeal the SBA's decision that the borrower was ineligible for the PPP loan in general or for the loan amount or loan forgiveness amount the borrower claimed. The SBA will be providing more guidance on this shortly.