PPP Update for Borrowers of $150,000 or Less

The SBA announced that PPP borrowers of $150,000 or less (for either first draw or second draw loans) have access to a simplified loan forgiveness process:

  • SBA Loan Forgiveness Portal – Borrowers are able to submit their loan forgiveness application directly to the SBA through a streamlined portal as of August 4, 2021, rather than to their lender/bank.
    • The lender/bank must opt-in to participate in this program. Therefore, check with your lender to see if you can utilize the SBA Portal. Currently, nearly 900 banks representing over 2 million borrowers have agreed to participate, however, it is expected that most large financial institutions will not participate and continue to use their proprietary portals. The SBA has provided a list of participating lenders.
    • The Portal will allow borrowers to complete Form 3508S which was recently revised.
    • The SBA set up a PPP customer service team to answer questions and directly assist borrowers with their forgiveness applications. The customer service team is available by calling (877) 552-2692, Monday – Friday, 5:00 AM – 5:00 PM PDT.

  • COVID-19 Revenue Reduction Score – Second draw borrowers are required to provide with their loan or forgiveness applications, documentation to evidence a 25% decline in gross receipts. Instead of providing tax forms, quarterly financial statements, or bank statements, second-draw borrowers can now use a COVID-19 Revenue Reduction Score as a method of proving their 25% decline in gross receipts.
    • An independent third-party SBA contractor developed the COVID Revenue Reduction Score based on a variety of inputs including industry, geography, and business size. The score uses current data on economic recovery and return of businesses to operational status. If the score validates at least a 25% gross receipts reduction, no additional documentation will be required.
    • Currently, access to the Revenue Reduction Score is limited to lenders and borrowers using the SBA Portal to apply for loan forgiveness. Since lenders can access these scores borrowers applying directly with their lender can avoid submitting documentation to establish a decline in gross receipts if their Revenue Reduction Scare qualifies.
    • California PPP borrowers: It appears the California Franchise Tax Board will follow this new guidance to allow use of the Revenue Reduction Score to document a decrease in gross receipts. California requires borrowers to have a 25% or greater decrease in gross receipts to be eligible to deduct expenses paid with a forgiven PPP loan.

As always, please contact us if you have any questions about your PPP or other SBA loan.

Source: SBA IFR: Business Loan Program Temporary Changes