Paycheck Protection Program – Five Updates for Borrowers

While guidance for the Paycheck Protection Program (PPP) has slowed significantly in 2021, some updates continue to affect borrowers, particularly those applying for loan forgiveness. Borrowers should consider five key updates:

1. If you haven’t submitted your first round PPP’s forgiveness application, consider your timeline to apply.

   All Borrowers must apply for loan forgiveness, regardless of their loan size, by submitting an application for forgiveness to their PPP lender. Borrowers have ten months from the completion of the Covered Period to submit their PPP forgiveness applications, or those borrowers will begin to make principal and interest payments on their loans. All borrowers should understand when they must apply for forgiveness, as the ten month deferral period for early loan recipients may have ended or may be ending soon.

   As of now, second draw PPP loan recipients (as well as recipients of first draw PPP loans received in 2021) will have the same timeline to apply. In determining when to apply for forgiveness, Borrowers may consider their deadlines, coordination with other COVID-19 relief programs, individual business circumstances, and any instructions provided by their lender. Some lenders may not open their PPP forgiveness portals for 2021 loans until later in the year.



2. SBA drops the controversial Loan Necessity Questionnaires.

   On July 9, the SBA withdrew their requirement for the loan necessity questionnaires by notifying lenders that the loan necessity review for borrowers of loans $2 million or greater would be eliminated. These forms, Form 3509 (for for-profit borrowers) and Form 3510 (for non-profit borrowers) should no longer be requested, and form requests in progress should be closed. SBA committed to providing additional guidance, which has yet to be released.



3. All loans, regardless of size, can be reviewed.

   Borrowers should be aware that all loans, regardless of loan size, can be reviewed by SBA. Borrowers will be notified if they are reviewed, and additional documentation may be requested. All borrowers should be aware of the documentation requirements for their PPP loan. A list of documents to submit with forgiveness applications and to maintain (but that are not required to be submitted) are available on the SBA Loan Forgiveness Application Form.



4. Rumors persist regarding a direct to SBA PPP forgiveness portal.

   Several news outlets are reporting that the SBA is expected to release an online portal for PPP loan forgiveness applications, where borrowers submit their forgiveness applications direct to the SBA. For a business to use the portal, it is expected that the business’s lender must opt into the SBA platform. Until more information is available, borrowers should continue following their lenders’ processes to apply for loan forgiveness. More information is expected as early as August.



5. More simplifications for select borrowers are possible.

   News outlets are also reporting that the SBA is working to further simplify the PPP loan forgiveness process for borrowers with loans between $150,000 and $2 million. Since the program was introduced via the enactment of the CARES Act in March 2020, SBA has released nearly 100 Frequently Asked Questions, as well as over thirty Interim Final Rules and several Procedural Notices. Borrowers should continue to watch for guidance, and be prepared to follow any guidance available that may affect their loan or forgiveness.

For questions about your PPP loan, its forgiveness, or other COVID-19 relief programs, contact a member of HBK’s COVID-19 Response Team or your HBK Advisor.