Reports from the U.S. Treasury Department have begun surfacing indicating that the federal agency expects to step up the pace of processing Payroll Protection Program (PPP) loan forgiveness applications later this week or early next week. Both the Nation’s Restaurant News and The Wall Street Journal are reporting that “a Treasury Department spokesperson” confirmed that information.
More than 96,000 forgiveness applications have been filed so far for the more than 5 million PPP loans that were issued. An unnamed Treasury Department spokesperson has indicated that none of the forgiveness applications have been processed to date according to a report in the New York Post.
Technology issues might be at the core of a processing problem, according to a report in Federal Computer Week (FCW), which described potential glitches with the software acquired by the Small Business Administration specifically to handle the PPP loan forgiveness applications. The program was launched on August 10, 2020. According to FCW, William Manger, SBA chief of staff, is consulting with the software contractor on potential data input issues that PPP lenders are experiencing when submitting forgiveness applications.
Complexity associated with the process is also weighing on those who have attempted to file the forgiveness applications. “The complexity of the forgiveness process is one of the factors that, in my opinion, has resulted in a very low submission rate of forgiveness applications to SBA,” said Lynn Ozer, President of SBA Lending at Fulton Bank in Pottstown, PA, at a meeting last week of the House Small Business Subcommittee on Economic Growth, Tax, and Capital Access. “Borrowers and lenders simply have been unable to complete the application process because they do not fully understand the requirements for forgiveness, and are reluctant to submit incorrect applications that could cause them to lose the forgiveness to which they are entitled, or worse, get into trouble with the federal government.”
“The agencies should come together once again and provide a streamlined loan forgiveness application for small-dollar borrowers, who represent the vast majority of all PPP borrowers,” said Representative Andy Kim (D-NJ) who leads the Subcommittee.
Several organizations have requested that Congress approve automatic forgiveness of the PPP loans that are under $150,000, including the Consumer Bankers Association, the Bank Policy Institute, and other banking institutions.
Treasury Secretary Steven Mnuchin has indicated his support for automatic forgiveness for PPP loans under $150,000, however legislation attempts to enact an automatic forgiveness program for loans under $150,000 (H.R. 7777, S.4117) are still in committee.