Restaurants with Paycheck Protection Program (PPP) loans of $150,000 or less will be able to use a simplified online process starting Aug. 4 to determine with less time and effort if they qualify for loan forgiveness, the U.S. Small Business Administration (SBA) announce Wednesday.
The new web portal streamlines the forgiveness assessment by shifting the evaluation process from affiliated lenders to the SBA, the PPP’s administrator, eliminating a potentially time-consuming step.
“The vast majority of businesses waiting for forgiveness have loans under $150,000,” SBA Administrator Isabel Guzman said in a statement. “These entrepreneurs are busy running their businesses and are challenged by an overly complicated forgiveness process. We need to deliver forgiveness more efficiently.”
Knowing that a PPP loan has been forgiven essentially frees restaurateurs from having to put aside funds for repayment as they struggle to cover a host of other financial obligations from the pandemic, such as back rent or overdue debt service.
“This initiative will allow PPP borrowers to put their concerns of achieving full forgiveness behind them and focus on operating and growing their businesses again,”said Patrick Kelley, associate administrator of the SBA’s Office of Capital Access.
The agency said that about 6.5 million borrowers will be able to use the streamlined process.
The simpler option also promises to spare borrowers from the sort of frustration many voiced while filing and waiting for approval of their PPP applications.
The program, which channeled nearly $800 billion in potentially forgivable loans to small businesses, was an essential lifeline for many restaurants during the COVID crisis. The money could be spent on payroll and selected other operating expenses, and borrowers had to stick exactly to those guidelines if they wanted their loans to be turned into grants through forgiveness. Many loan recipients groused about the difficulties in clarifying exactly what was permitted under the forgiveness rules, in part because their prime contacts were local lenders rather than the SBA itself.
Others complained that millions of dollars went to sizable corporations instead of the mom-and-pop businesses the PPP was intended to help.
In announcing the new forgiveness portal, the SBA also said it was creating a customer-service team to answer applicants’ questions and provide assistance in submitting the necessary support materials.