Many U.S. business owners covered the costs of their group health-care benefits and insurance premiums using Paycheck Protection Program loan proceeds. Now, the Small Business Administration is trying to make things a bit less complicated for businesses that took out PPP loans of $150,000 or less during the height of the COVID-19 pandemic.
Rather than apply for forgiveness of their PPP loan through their lender, these businesses can now use the SBA’s Direct Forgiveness Portal to submit a simple prefilled application.
According to the SBA, over 6.5 million businesses have an outstanding PPP loan of $150,000 or less, accounting for the vast majority of all such loans. Intended to forestall layoffs during the pandemic, more than $800 billion in PPP loans were made between April 2020 and June 2021.
While many lenders have yet to opt in to the portal, more than 600 have, meaning about 2 million borrowers will be able to use the portal right away.
“These entrepreneurs are busy running their businesses and are challenged by an overly complicated forgiveness process,” SBA Administrator Isabel Guzman said in a statement. “We need to deliver forgiveness more efficiently so they can get back to enlivening our Main Streets, sustaining our neighborhoods and fueling our nation’s economy.”
Banks were quick to step up to the plate in processing loans in the early days of the pandemic. But loan-forgiveness has been a slow-go process, in part because the banks have been overwhelmed by the volume of loans and a requirement to issue their decisions within 60 days of receiving an application for a PPP loan forgiveness.
In addition to the new loan forgiveness portal, the SBA is reducing the documentation requirements for some of the smallest businesses that took out PPP loans.
Other SBA Funding Options
Although the taxpayer-supported PPP ended on May 31, business owners looking for lower-cost financing still have a few options through the SBA.
One of the more popular, the standard SBA 7(a) loan program now comes with higher guarantees – at least for the moment – and waived fees. The 7(a) also features long repayment terms and low interest rates and can be used for working capital, expansion and equipment and supply purchases.
To learn more about how to use the PPP’s Direct Forgiveness Portal, the SBA offers this guide as a resource. In addition, the SBA has a PPP customer service team to answer questions and directly assist borrowers with their forgiveness applications. Borrowers that need assistance or have questions may also call 877-552-2692. For specific information about your organization’s loan, the SBA advises that you contact your lender.
The Mahoney Group, based in Mesa, Ariz., is one of the largest independent insurance and employee benefits brokerages in the nation. For questions about business insurance matters, contact us online or call 480-730-4920.
This article is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice.