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SBA Now Processing PPP Forgiveness Decisions, Payments

Mary Ellen Biery
October 6, 2020
Read Time: 0 min

SBA processing forgiveness decisions, payments

The Small Business Administration (SBA) is now processing some Paycheck Protection Program (PPP) loan forgiveness decisions and related payments.

During a call with SBA 7(a) lenders on Tuesday, SBA Deputy Associate Administrator Bill Briggs told attendees that PPP lenders will be getting a letter regarding the remittance of payment for PPP forgiveness applications that have been submitted. “SBA has begun the process of remitting payments, and we expect that to increase," he said.

A Treasury Department spokesperson told several news outlets last week that the government expected to sign off on and begin paying some forgiveness requests by early this week. This week marks eight weeks after the SBA’s PPP Forgiveness Platform opened on Aug. 10 to begin receiving applications processed by lenders. Under the PPP forgiveness timeline outlined in the CARES Act, the SBA has 90 days to review forgiveness application submissions and remit payment to the lenders for the forgiven portion.

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Additional PPP changes up in the air

In the meantime, it remains to be seen whether Congress will be able to extend or add to the PPP after the House passed a $2.2 trillion relief package along party lines Thursday. House Speaker Nancy Pelosi reportedly met Monday with Treasury Secretary Steven Mnuchin to try to work out a deal that will garner support from the Republican-led Senate. The House-approved measure would include some streamlined forgiveness processes for PPP loans of $150,000 or less, which Mnuchin said on Friday he supports.

“As it relates to the forgiveness part of this, I appreciate for many small businesses, the forgiveness process is a little bit complicated,” Mnuchin said during an interview with Rep. Tom Reed (R-NY) posted on YouTube. “As part of additional legislation, we do support the bipartisan fix to simplify the process for loans that are $150,000 or less but still gives the SBA the ability to audit, which is necessary. Unfortunately, without legislation, there’s only so much we can do.”

Mnuchin said the SBA and Treasury are also working toward “an administrative solution” to make it easier for borrowers of loans of $50,000 or less to apply for forgiveness.

“We’re trying to work on a solution for loans that are $50,000 and less administratively that at least makes it slightly easier, and hopefully we’ll roll that out within the next week,” he told Reed.

Lawmakers and regulators have been working to answer the call from borrowers and lenders to streamline the forgiveness process, but they are also facing pressure to mitigate the risk of losses to taxpayers from fraud.

During a House Subcommittee hearing Oct. 1 on fraud tied to the PPP and the Economic Injury Disaster Loan (EIDL) program, government auditors and lawmakers expressed frustration, saying that while the programs have provided help to small businesses, too little has been done to mitigate fraud.

Hannibal “Mike” Ware, Inspector General of the SBA Office of the Inspector General, noted that since May 5, when the first DOJ charges were brought, more than 57 defendants have been charged related to PPP fraud, and hundreds of investigations are ongoing. "We’re on this, and we’re going to keep on this."

He said that despite working with the SBA to mitigate risk, "There's no doubt a large part [of funding] has gone to ineligible recipients."

William Shear, Director of Financial Markets and Community Investment for the U.S. Government Accountability Office (GAO) agreed. “It’ll be a long time before we know how much fraud there was in the program" of 5.2 million PPP loans and 3.5 million EIDL loans, he said. He said the OIG would like to work with the SBA even now to ensure it sets up a fraud risk framework to prevent further fraud as it proceeds with forgiveness and the rest of the program. "We very much recognize there was a push to get loans out,” Shear testified. “But with the passage of time it becomes more troubling when the fraud framework is not in place to mitigate the risk in place."

New SBA guidance on PPP borrowers selling businesses

Also on the PPP front, the SBA has released new guidance on dealing with borrowers selling or trying to sell their businesses. Procedural Notice 5000-20057 issued Oct. 2 clarified that original owners/PPP borrowers remain responsible, regardless of any change of ownership, for:

  • the performance of obligations under the PPP loan
  • certifications tied to the PPP application
  • compliance with all other PPP requirements
  • obtaining, preparing, and retaining all required PPP forms and supporting documentation
  • providing those forms and supporting documentation to the PPP lender or lender servicing the PPP loan or to SBA upon request.

In some cases, the PPP lender may unilaterally approve the change of ownership, but in others, prior SBA approval is required. In all cases, however, the procedural notice said the PPP borrower “must notify the PPP lender in writing of the contemplated transaction and provide the PPP Lender with a copy of the proposed agreements or other documents that would effectuate the proposed transaction.” In all cases, the PPP lender must also continue submitting monthly 1502 reports until the PPP loan is fully satisfied.

The notice defined a change of ownership for PPP borrowers as one of the following:

  • the sale or other transfer of at least 20% of common stock or other ownership interest of a PPP borrower (including a publicly traded entity), including the sale or transfer to an affiliate or an existing owner of the entity – whether in one or more transactions
  • the PPP borrower sells or otherwise transfers at least 50% of its assets (based on fair market value) – whether in one or more transactions
  • a PPP borrower is merged into or with another entity.

For more information about the PPP, see Abrigo’s CARES Act and PPP Resource Page.

About the Author

Mary Ellen Biery

Senior Strategist & Content Manager
Mary Ellen Biery is Senior Strategist & Content Manager at Abrigo, where she works with advisors and other experts to develop whitepapers, original research, and other resources that help financial institutions drive growth and manage risk. A former equities reporter for Dow Jones Newswires whose work has been published in

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About Abrigo

Abrigo enables U.S. financial institutions to support their communities through technology that fights financial crime, grows loans and deposits, and optimizes risk. Abrigo's platform centralizes the institution's data, creates a digital user experience, ensures compliance, and delivers efficiency for scale and profitable growth.

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