Knowledge and Insights

On July 23rd, the Small Business Administration (SBA) issued the following Procedural Notice regarding the process which lenders must follow in their review of your Paycheck Protection Program (PPP) forgiveness application and how they will interface with the SBA to request reimbursement for loans that they approve for forgiveness.

View the Procedural Notice here – https://www.sba.gov/sites/default/files/2020-07/5000-20038.pdf

The notice informs PPP lenders of a new secure user interface platform to be used in: (1) submitting decisions on PPP loan forgiveness applications to the SBA and requesting payment of the forgiveness amount determined by the lender, and (2) notification by the SBA to the lender if a PPP loan has been selected for loan review.

The SBA partnered with a financial services technology provider (Goldschmitt-CRI) to develop a secure PPP Forgiveness Platform for lenders and the SBA to submit, review and accept or reject loan forgiveness decisions, supporting documentation, and requests for forgiveness payments.

The notice reaffirmed prior guidance issued as part of the SBA’s Interim Final Rules that a lender’s decision on forgiveness applications submitted to them by borrowers could be one of the following:

1. Approved in Full – the lender is approved in full for the forgiveness amount requested by the borrower and the forgiveness amount requested by the lender equals that amount.
2. Approved in Part – the lender did not approve the full forgiveness amount requested by the borrower and the forgiveness amount requested by the lender is less than the forgiveness amount requested by the borrower.
3. Denied – the lender denied the entire forgiveness amount requested by the borrower.
4. Denied without Prejudice – the lender should use this status when an SBA loan review is pending at the time the borrower submits a loan forgiveness application.

It’s important to note that the PPP Forgiveness Platform will only be available to PPP lenders, not PPP borrowers.

The PPP Forgiveness Platform allows lenders to upload required data and documentation, monitor the status of the forgiveness request, and respond to the SBA in case of an inquiry or if the SBA selects the loan for review. The PPP lender will also be able to utilize the PPP Forgiveness Platform to provide the SBA with ACH credit information, for an account owned by the lender of record listed on the SBA ETRAN system, where the lender wishes to receive the PPP forgiveness payments.

A link to the PPP Forgiveness Platform will be posted on the SBA’s website, and lenders may begin submitting their loan forgiveness decisions on August 10, 2020.  However, the August 10th date is subject to extension if any new legislative amendments to the forgiveness process result in changes to the system.

Borrowers have up to 10 months after the end of the covered period to submit their forgiveness applications and there doesn’t appear to be a reason to rush.  In some cases, a borrower’s best option may be to wait until additional guidance is issued before submitting their PPP forgiveness application.

Whether you’re a PPP lender or borrower, Mercadien is here to help. Mercadien’s customized solutions were designed to assist both borrowers and lenders with the PPP forgiveness process and include assistance:

1. Assessing required loan forgiveness calculations and underlying supporting documents;
2. Converting loan expense data into a trackable report to be submitted to or evaluated by lenders;
3. Developing alternative scenarios to determine whether adjustments are required during the covered period in order to maximize forgiveness opportunities; and
4. Keeping you current on the latest SBA rules and regulations and their impact on your business.

Contact our task force through our COVID-19 Assistance Request Form or Frank Pina, CPA, Managing Director at [email protected] or 609-689-2319.

DISCLAIMER: This advisory resource is for general information purposes only. It does not constitute business or tax advice, and may not be used and relied upon as a substitute for business or tax advice regarding a specific issue or problem. Advice should be obtained from a qualified accountant, tax practitioner or attorney licensed to practice in the jurisdiction where that advice is sought.