The agency overseeing PPP wants to expedite forgiveness for the remaining 7.8 million loans, worth $385.4 billion. Here’s the plan.

The Small Business Administration is expected to release details on its forthcoming Paycheck Protection Program forgiveness portal on Wednesday. That should mean speedier decisions — with some caveats — for the remaining 7.8 million loans, worth $385.4 billion.

Ahead of the release, in which the agency is slated to publish an interim final rule on the subject of forgiveness, the SBA authored a series of forgiveness portal user guides for lenders, which Inc. has reviewed. Here are three of the biggest features to look forward to:

1. Direct Forgiveness

Business owners will be able to apply for forgiveness directly with the SBA. This option will be available only to borrowers with loans of $150,000 or less — which is 95 percent of all loans issued in 2021. Currently, all borrowers need to apply for loan forgiveness at their lender. 

2. Batch Uploads

Lenders or their technology partners may also elect to use the SBA portal’s batch upload function, which the SBA says tends to be useful for lenders with more than 500 forgiveness submissions.

3. Covid Health Score

Second-draw borrowers with loans of $150,000 or less may elect to use something called a “Covid health score,” which is an automatic score that is intended to validate a company’s revenue reduction over the period in question. The score, determined by Dun and Bradstreet’s Commerce Health Index, combines various public and proprietary data sources like foot traffic and business-to-business expenditures. For those whose scores don’t jibe with reality, you’ll need to upload documentation into the platform indicating that your revenue loss in 2020, relative to 2019, amounted to at least 25 percent. 

What’s in It for Lenders?

Lenders are by no means off the hook for forgiveness. They will need to both opt-in to use the SBA portal and ultimately make the forgiveness decision for every loan on their books — even for PPP borrowers that apply for forgiveness directly with the SBA. Plus, they’ll still need to directly process any loans worth more than $150,000. Lenders have 60 days to make a loan forgiveness decision once it gets an application, and depending on its review, the SBA must then remit funds within 90 days. If there are any discrepancies, the borrower may need to provide additional verifying documentation. Lenders would then notify borrowers of their loan forgiveness amount.

However, being able to offload the smaller-dollar forgiveness applications, if only to a degree, may be appealing. As a reminder: Through its lending partners, SBA doled out more than 11.8 million PPP loans worth $780 billion since the start of the pandemic. Making forgiveness a lighter lift could help free lenders up to make other loans, which is, in part, how they make money. 

You can still expect some lag time between when the SBA finalizes its portal and when lenders actually sign up — and that’s if they sign up at all. “Banks like ours are debating the pros and cons of opting into the federal system,” says David Patti, a spokesperson for Customers Bank, based in Phoenixville, Pennsylvania. The SBA has given lenders technical guidance on how to set up their systems and API connections — and the system itself is actually running in pilot mode. But many lenders have been reportedly waiting up to six weeks for the rules governing the portal to get released before they sign up. 

Too Little, Too Late?

Of course, this new portal does nothing to help PPP borrowers who’ve already applied for forgiveness. According to a report out last week from the Pandemic Response Accountability Committee (PRAC), a group of inspectors general from different federal agencies that tracks relief spending for the government, more than 4 million PPP loans, amounting to $394.6 billion, have already been forgiven. That’s just over half of the full outlay, since April 2020.

You might then be wondering why the SBA would choose to launch this portal now — more than a year after the program launched and two months after the first PPP recipients began repaying the loans that haven’t already been forgiven.

The delayed timing may well be deliberate, says Bill Briggs, the former director of the SBA’s office of capital access. In a recent interview, he pointed out that the latest round of PPP, which opened up in January 2021, involved funneling many loans through lenders like community financial institutions (CFIs) that tend to lack the resources to throw at, say, building a complicated forgiveness portal from scratch.

CFIs typically focus on helping under-served business owners access capital, which was a key goal during this latest PPP round. To wit, the program reopened to just CFIs for two days prior to launching at other lending institutions on January 13, 2021. CFIs also had exclusive access to the program for three weeks prior to the program’s May 31 end date.

Offering a tool for forgiveness now may also just be the SBA’s way of taking more control over the PPP process, which by its nature has fallen into the hands of more than 5,200 lenders. At various times, the SBA had tweeted appeals for businesses to apply for loan forgiveness. Here is a tweet from SBA.gov dated August 11, 2020. At that time, many banks were not ready to process the applications. As of October 2020, for instance, Bank of America’s online PPP forgiveness portal was still inoperable.  

The SBA is also just ready to put forgiveness behind it, says Briggs. “Politically, they want to get [forgiveness] done because there’s an operational burden — it costs a lot to do it. But also, they want to do their own thing, and some of those things might take Congress,” he says. “If they’re still pressed for forgiveness a year from now, as opposed to just dealing with stragglers, that’s a different story.”