The SBA will begin accepting PPP forgiveness applications from lenders on August 10, subject to extension if any new legislative amendments to the forgiveness process are adopted.

According to a procedural notice issued by the Small Business Administration (“SBA”) to lenders on July 23, the SBA plans to email instructions for using the portal to program lenders. Individual PPP borrowers may not apply directly to the SBA for forgiveness but must apply through their lender.

This procedural notice does not substantively modify the forgiveness process as it has been established under prior SBA guidance. Once a borrower submits a forgiveness application to its lender, the lender has up to 60 days to complete a review of the application and submit it to the SBA. The lender is expected to perform a good-faith review of the borrowers’ calculations and supporting documents. If the lender identifies errors it must work with the borrower to remedy the situation before the application goes to the SBA. The application will be sent together with required certifications and supporting documentation as well as the lender’s decision to approve, in whole or in part, or deny the borrower’s application. The SBA then has up to 90 days in which to process the application and to remit to the lender the appropriate forgiveness amount with interest. The lender will be responsible for notifying the borrower of the SBA’s decision.

The SBA may review a loan of any size, in its discretion, for borrower eligibility, as well as the merits of forgiveness request. The SBA has previously stated it intends to automatically review all loans over $2 million. If SBA decides to review a loan, it will notify the lender and the lender must notify the borrower within 5 business days. The SBA may request additional information from the lender or the borrower, and the SBA will notify the lender of its determination. The lender will notify the borrower who then has 30 days to appeal the SBA’s determination. After a lender receives an appeal, it has 5 days to transmit the appeal to the SBA. The SBA has promised additional rules and guidance on this appellate process. Borrowers are reminded that the SBA requires loan recipients to retain records for 6 years. It is possible that SBA review could occur at any time during those 6 years, even after a borrower’s forgiveness has been determined.

Borrowers should also recognize that while the forgiveness portal is opening August 10, the only deadline for PPP borrowers seeking forgiveness remains 10 months after the borrower’s chosen covered period ends. Ten months after the chosen covered period ends, the borrowed funds become a loan that must be repaid.