Small Business Administration has opened its Paycheck Protection Program forgiveness portal. Here’s why many small businesses will have to wait.

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Small businesses wishing to submit their paycheck protection program loan forgiveness may have to wait.

While the Small Business Administration officially opened its forgiveness portal to lenders on Aug. 10, many lenders will likely wait, according to banks and experts. Indeed, the potential for shifting direction, new legislation and the desire to fully prepare for a flood of demands mean that banks have little incentive to get started immediately.

San Francisco banking giant Wells Fargo said in a statement that it was awaiting further advice from the SBA regarding pardon and could not confirm when it would begin processing pardon requests. JPMorgan Chase & Co., the world’s largest PPP loan processor, said its remittance process would not be operational until late August or early September.

Bank of America also did not accept pardon requests on Aug. 10, saying it “communicates directly with customers with additional instructions on how and when to make a request.” Both Truist Bank and PNC Bank have said they will start accepting small business forgiveness requests later this month.

These five banks, the top five PPP lenders in terms of total dollar amount, accounted for 968,109 PPP loans as of July 31, according to SBA data, or about 19% of the more than 5 million PPP loans made to that date. dated. The SBA has approved a total of $ 521.3 billion in PPP loans to date.

Richmond, the Atlantic Union Bank of Virginia, which has processed a disproportionate number of PPP loans for a bank its size, said it would start accepting forgiveness requests on August 19, with CEO John Asbury saying they were testing the portal live.

“We will send email invitations to PPP borrowers to begin the remission process, and we will do this in daily batches in order of the loan funding date. [with the earliest first]”Asbury said in an email, but added that if the forgiveness rules change, they will update the portal accordingly.” We are reviewing with great interest the legislation pending in Congress as it could significantly reduce the forgiveness application process, especially for loans under $ 150,000 if passed. “

Automatic loan cancellation for small loans is just one of many changes Congress is considering for the PPP, which includes different simplified loan cancellation rules based on loan size, the possibility for some small businesses to withdraw extra money on their first PPP loans. and the possibility of obtaining an expanded set of forgiven costs, among others.

JPMorgan said that while he monitors Congress, he will not wait for legislation to build his portal. However, if loans under $ 150,000 were automatically canceled, that would represent about 90% of its PPP loans, the bank said.

Jeff Morlend, financial partner at law firm Sullivan & Worcester LLP, said he has spoken to a few banks that are taking a wait-and-see approach to what has become a series of shifting PPP requirements and shifting directions and additional expectations changes in the future.

“They want to see how things go, and if any advice comes out or the request is revised, they want to be able to get its head around and update their internal processes before they start accepting requests,” Morlend said. . “The number of requests that will flow once the doors open is quite significant. “

And if the SBA or Congress changes the pardon rules after a bank starts accepting requests, that only creates additional work in a pipeline that may already be at full capacity, he added.

He highlighted the multiple iterations of the loan forgiveness request, first published on May 15 and revised on June 16, as well as a separate simplified request, as well as additional loan forgiveness information released in early August. .

Banks and borrowers are still unsure whether there might be any updates or additional advice in the coming days, Morlend added. And for businesses that have taken the time to complete their paperwork, they should also decide to submit immediately.

“This is the kind of game that a lot of companies are playing right now – do we submit as soon as the portal opens and are we ready to do it? Or are we waiting or seeing if things have yet to change? Morlend said.

And although banks receive a fee for processing loans and only get the remittance funds after they submit an application to the SBA, nothing in the law specifies when they must do so, according to Tenley Carp, a partner at the SBA. law firm Arnall Golden Gregory. LLP.

“There is nothing in the law, regulations or even guidelines that tell banks they have a deadline by which they must accept loan forgiveness requests from borrowers. And it’s huge because we have an open problem here, ”said Carp.

For banks that have processed a large number of PPP loans, their biggest concern is to streamline and automate the process so they aren’t overwhelmed with a flood of remittance documents, Carp said.

This article originally appeared in the Washington Business Journal’s website.


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