The payments to lenders for forgiven Paycheck Protection Program (PPP) loans are starting to flow.
Lenders using Abrigo’s PPP Forgiveness and Automation solution have had more than 4,000 loans totaling $126.8 million approved by the Small Business Administration (SBA) in the days since the SBA started remitting payments. That means all applications sent through Abrigo’s solution so far that have made it all the way through the SBA's decisioning process have been approved fully.
The flow of approvals is good news for community financial institutions that have been working since late March to provide $525 billion in funding to U.S. small businesses. Community financial institutions with less than $10 billion in assets had provided nearly half of all PPP funding by the time the program closed Aug. 8. Many of the banks and credit unions have been carrying the loans on their balance sheets since the PPP launched on April 3, and they’ll have to service any portion of loans that are not forgiven.
According to SBA guidance, lenders are responsible for notifying the borrower of the loan forgiveness amount remitted by SBA. If SBA determines that the full amount of the loan is eligible for forgiveness and remits the full amount of the loan to the lender, the lender must mark the PPP loan note as “paid in full” and report the status of the loan as ‘paid in full’ on the next monthly 1502 report filed by the lender.
If a PPP loan is not forgiven in full (for example, if the forgiven amount is reduced for an Economic Injury Disaster Loan, or EIDL, Advance), the lender must notify the borrower of the amount remitted by the SBA, as well as the due date for the borrower’s first loan payment. The lender must continue to service the loan.