On Wednesday, July 28, the U.S. Small Business Administration announced the opening of the PPP Direct Forgiveness Portal. Open now, this portal makes the loan forgiveness process easier for over 6.5 million qualifying small business owners.
The new portal will streamline applications for PPP loan forgiveness from borrowers who received loans of $150,000 or less during the pandemic. This represents 93% of outstanding PPP loans, most of which are held by sole proprietors.
Streamlined rules for loans under $150,000
COVID Revenue Reduction Score
As a reminder, borrowers applying for their second draw PPP loan had to confirm they experienced a 25% reduction in revenue between a quarter in 2019 and the same quarter in 2020. (For example, Q1 of 2019 versus Q1 of 2020). PPP borrowers had to provide documentation of this loss in revenue.
Some PPP lenders have expressed concerns to the SBA that they lack the technology and resources to create efficient platforms to process loan forgiveness applications. Lenders are overwhelmed and having difficulty adhering to the 60-day requirement to issue decisions. There are additional concerns that the revenue reduction documentation for second draw loans is delaying forgiveness even further.
To address the above concerns, the SBA developed the COVID Revenue Reduction Score tool. It generates a score for second draw PPP loans based on a variety of factors regarding the borrower’s business. These factors include location, industry, size of the business, and more.
If your lender opts to use this score, it can act as an alternative to proving a 25% reduction in revenue with your own documentation—if your score meets or exceeds the requirement.
If a score does not meet the requirement, borrowers are still required to provide this documentation.
The Bench team is still waiting for confirmation on how these scores are calculated. We will update this post as soon as we learn more.
Direct Forgiveness Portal
The SBA is establishing a direct borrower forgiveness portal for lenders that choose to opt-in. Usage of the portal is not required, but as previously mentioned, most lenders will likely use the portal for increased efficiencies during forgiveness.
Borrowers, lenders, and the SBA will work together inside the portal to provide forgiveness decisions. This means no more back and forth between the three parties, resulting in a much smoother forgiveness experience.
Borrowers cannot use the direct forgiveness portal if:
- They have already submitted a PPP forgiveness application (lenders are required to process applications they have already received)
- Their lender chooses not to opt-in to using the platform
- Their PPP loan is over $150,000
- They disagree with the COVID score that is in the SBA platform
- They cannot validate their identity in the platform
- Their submission is rejected by the platform
If none of the above apply to you, you can register now. You need the following information to register:
- EIN, SSN, or ITIN used to apply for the PPP loan
- SBA loan number
- Business NAICS code
- Covered period start and end date
- Gross receipts for 2019 and 2020
- Employees at time of loan application
- Employees at time of forgiveness request
- Amount of loan spent on payroll
- Requested forgiveness amount
- Demographic details (optional)
All other loan information should be prefilled in the platform. This information is imported directly from the lender.
Supporting documents may be required based on your COVID revenue reduction score. However, the SBA can also request documents based on the characteristics of your request. At this time, we don’t know what these situations would be. Check out our guide to the documents the SBA will require if this applies to you.
New rules for all borrowers
Deferral period extension
If a borrower is appealing a final SBA loan review decision, they can defer PPP repayments until a final decision is made. The borrower should notify their lender of the appeal, and the lender can extend the deferment period.
Appeals must be submitted within 30 days of receiving the SBA’s final loan decision.
Portal use: Open to anyone who has not already submitted an application through their lender
Covid Reduction Score: Open to second draw loans for which the lender has not yet issued a forgiveness decision to the SBA
Deferment: open to anyone who submits a timely appeal after July 28, 2021
More information on the Paycheck Protection Program
Since the PPP was announced at the onset of the coronavirus, our teams at Bench have been assisting businesses with understanding the PPP and EIDL. We provided free consultations and built a PPP loans hub with a comprehensive set of resources dedicated to helping business owners navigate the relief funding programs and the loan forgiveness application process.
- PPP Loan Forgiveness: The Complete Guide
- How PPP Loan Forgiveness Works for Sole Proprietors
- Self-Employed Guide to the PPP Forgiveness Application
- Owner Compensation Replacement and Full PPP Forgiveness
- When Can I Submit My PPP Loan Forgiveness Application
- PPP Audits: What You Need to Know
The Paycheck Protection Program (PPP) was signed into law as part of the CARES Act on March 27, 2020. Since then, the SBA has reported over 7 million approved loans distributing more than $687 billion dollars, making it one of the largest and furthest-reaching business relief programs in US history. To learn more, visit SBA.gov