The SBA Opens Its Loan Forgiveness Portal

The Small Business Administration (“SBA”) opened its portal for Paycheck Protection Program (“PPP”) loan forgiveness applications on August 10, 2020. To apply for forgiveness, a borrower must submit a loan forgiveness application (SBA Form 3508, 3508EZ, or Lender’s equivalent) to its lender. Because each lender may create its own form of forgiveness application, each borrower should consult with its lender about the lender’s specific requirements for preparing an application.

Upon receiving a borrower’s application, a lender has 60 days to review and submit the application and the lender’s recommendation to the SBA through the SBA portal. The SBA then has 90 days to make its forgiveness decision and remit the amount it determines should be forgiven to the lender, who will inform the borrower of the determination. If the amount approved is less than the full amount requested, then the SBA will notify the lender of that fact and the lender in turn will notify its borrower. As a reminder, if the SBA denies full forgiveness, the borrower must repay the unforgiven amount according to the provisions of the note that it executed at the time the loan was closed (as may have been modified or extended since that time). Note that any PPP loan can be audited at any time within six years after the loan was issued; for loans exceeding $2 million, an audit at or near the time forgiveness is requested will almost certainly be triggered.

Despite the opening of the portal, many lenders have announced they are delaying the processing of applications pending additional guidance on forgiveness from the SBA, potential legislation currently pending before Congress and each lender finalizing its own procedures for the expected onslaught of applications. Lenders such as Truist Bank and PNC Bank have announced they are delaying until the end of August; JPMorgan Chase is delaying until late August or September; Huntington Bank is delaying until September; while other lenders, such as Wells Fargo, are delaying without setting a target date for processing applications. Each PPP borrower should contact its lender to confirm when that lender will begin reviewing forgiveness applications.

If you would like further information or to discuss this guidance, please contact Greg Gorospe or Josh Christie of Ice Miller’s COVID-19 Task Force.

Please contact our COVID-19 Task Force if you have any questions about managing the risks of the coronavirus pandemic. Our Task Force leadership consists of partners Josh Christie, Tami Earnhart and Christina Fugate. Also see our Coronavirus (COVID-19) Resource Center for additional resources, which is updated daily.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. It speaks only to guidance available as of August 10, 2020. The reader should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader’s specific circumstances.