PPP loan forgiveness process now simplified, SBA says
Streamlined form unveiled for recipients of $50,000 or less
Businesses that received less than $50,000 in Paycheck Protection Program funds now have a simplified form to submit to their bank to get forgiveness on that loan, the U.S. Small Business Administration announced Thursday night.
The one-page form asks for such basic information as the number of employees, the amount of the loan and the amount to be forgiven. That’s it.
The employer does not even have to break down the amount spent on payroll, though the instructions require providing documentation that the money was used for employees (or in the case of a self-employed business, it was transferred to the business owner or owners.) That documentation could consist of providing bank account statements.
The PPP, created through the CARES Act at the beginning of pandemic, gave out more than $500 billion in one-time loans, $2.5 billion in the Granite State. The loans would be completely forgiven if the recipients spent at least 60% on payroll for the same number of employees at the same rate of pay and the same hours as before the pandemic. The rest must be spent on rent, mortgage interest and utilities.
The amount not forgiven must be paid back at 1% interest over two years, though businesses don’t have to start making payments until May 2021.
Although there was a mad rush for the program at the beginning, applications slowed as the months went on, leaving some $130 billion on the table when the program ended on Aug. 8. Some businesses said they didn’t seek PPP assistance because they worried about the forgiveness process and didn’t want to go into deeper debt.
This was particularly true of small businesses. Although the loan amount – 2.5 months of payroll – could be for as much as $10 million, the average loan size nationally was $105,000, and two-thirds of the businesses received less than $50,000.
In New Hampshire, 24,052 loans were approved, totaling $$2.55 billion with an average loan size of slightly more than $105,000.
While in New Hampshire on Oct. 2, Jovita Carranza, administrator of the U.S. Small Business Administration, told NH Business Review that the agency was considering streamlining the process for recipients of loans of $150,000.
Carranza also said the agency is starting to approve forgiveness for those non-streamlined applications already submitted, meaning the banks that processed the loans will be reimbursed and the businesses can take the loans off their balance sheets.