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Dear SBA: Can You Ever Forgive Me?

You’ve received a PPP loan, used the funds for the proper purposes, and now you’re ready to seek forgiveness. If you’re like most other borrowers, you have two primary questions: How do I request forgiveness and how long will it take? In this video, we are going to answer those questions. But first a quick disclaimer- the following discussion is merely a general overview and should not be relied upon as legal advice or a comprehensive guide to PPP loan forgiveness. Okay, with that out of the way, let’s address our two questions.

How do you request forgiveness?

The answer is relatively straight-forward. Once your lender begins accepting forgiveness applications, you will complete and submit to your lender the SBA Loan Forgiveness Application Form, SBA Loan Forgiveness Application Form EZ, or a substantially equivalent form used by your lender, along with all required supporting documentation. The instructions to these Forms tell you which Form you can or must use, and tell you what documentation to include. You may submit your forgiveness application before the end of your covered period as long as you have used all of the loan proceeds for which you are requesting forgiveness and your application accounts for any salary reductions in excess of 25% for the full covered period. Conversely, you may wait up to 10 months after the end of your covered period to submit your forgiveness application.

How long do you have to wait to receive confirmation of forgiveness?

The answer depends primarily on whether your loan is reviewed by the SBA.

If your loan is not reviewed by the SBA, then your lender has 60 days to submit its forgiveness decision to the SBA. The SBA then has 90 days to remit the forgiven amount to the lender. This payment from the SBA to the lender is when you can consider the loan forgiven (or partially forgiven if the SBA pays less than the amount your lender approved). Thus, your maximum wait-time for a loan not reviewed by the SBA is 150 days.

If your loan is reviewed by the SBA, there is no set timetable. Remember, all loans in excess of $2 million will be reviewed by the SBA and all loans, regardless of amount, can be reviewed by SBA at any time. Nothing released by the SBA has placed a time limit on how long a PPP loan review may take. If the SBA reviews the loan and finds no issues before the lender submits a decision to the SBA, then presumably the 60-day and 90-day periods discussed earlier apply.

Keep in Mind

Guidance released by the SBA indicates that a loan review may commence after the lender submits its forgiveness decision to the SBA. Such review essentially nullifies the 90-day period for the SBA to remit the forgiven amount to the lender. In that case, the SBA can, in theory, take as long as it wants. Furthermore, an SBA review may commence after you have submitted your forgiveness application but before your lender submits its decision to SBA. In this case, the lender essentially has to pause, send all information it has to the SBA, and then wait for the SBA review to finish. Again, this presumably can take as long as the SBA wants. In either case, however, no payments toward the PPP loan are required while this review is in process. Rather, assuming timely submission of the forgiveness application, the loan repayment does not begin until the SBA remits less than the entire loan amount to your lender, or you are notified that no amount will be forgiven.

Finally, the SBA has released guidance governing a borrower’s right to appeal loan review decisions by the SBA. Such right to appeal does not apply to a lender’s forgiveness decision with which the SBA agrees because no decision is deemed made by the SBA, meaning there is nothing to appeal. You may request that the SBA review and reconsider your lender’s forgiveness decision, but the SBA can deny such request. The right to appeal an SBA decision, however, cannot be denied as long as the proper appellate procedures are followed.

Key Takeaways

At the time of this video recording – late August 2020 – many lenders have not yet begun accepting forgiveness applications so it remains to be seen how the forgiveness process will go. The key takeaways for now are that if your loan is not reviewed, you will have to wait for confirmation of forgiveness no more than 150 days after you submit your forgiveness application. If your loan is reviewed by the SBA, however, no set time frame has been established so you will have to wait as long as is necessary for the SBA to complete its review, and then perhaps even up to 150 days longer.

If you have any questions about PPP, please contact your Carlile Patchen & Murphy attorney.

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