Will your bank sign on to the Small Business Administration's Paycheck Protection Program forgiveness portal? If you're one of the millions of business owners who've yet to apply for loan forgiveness, that's the question you should be asking.
On Wednesday, the SBA unveiled its forgiveness portal, a technology platform through which borrowers with PPP loans of $150,000 or less--which account for 95 percent of all such loans issued in 2021--can apply for loan forgiveness directly with the SBA, starting on August 4. Currently, borrowers may only apply for forgiveness through their lender.
Going through the SBA's system promises to speed up the time it takes to both apply and process your forgiveness application, which now requires you to fill in one of three forms, generally depending on the size of the loan. As it stands now, lenders have 60 days to make a decision on loan forgiveness applications. If they approve, the SBA must then remit funds within 90 days but if there are any discrepancies the borrower may need to provide additional verifying documentation. Lenders then notify borrowers of their loan forgiveness amount. Instead, the portal offers to do all of that digitally, in as little as 72 hours.
"The SBA's new streamlined application portal will simplify forgiveness for millions of our smallest businesses--including many sole proprietors--who used funds from our Paycheck Protection Program loans to survive the pandemic," SBA Administrator Isabel Guzman said in a statement. "We need to deliver forgiveness more efficiently so they can get back to enlivening our Main Streets, sustaining our neighborhoods and fueling our nation's economy."
But that's if your bank is participating. Individual lenders will have to opt in for you to access the platform. And it's unclear yet whether many banks will choose to do so.
In a release, the SBA noted that more than 600 banks had already opted in, enabling more than 2.17 million borrowers to apply through the portal. Yet nearly 5,500 lenders participated in the PPP. All together, the SBA says, it originated more than 11.7 million of the loans, totaling nearly $800 billion in relief to over 8.5 million small businesses.
Getting the remaining institutions--particularly those that already offer their own forgiveness portals--to sign on will be a significant hurdle, says Dan O'Malley, CEO of Numerated, a Boston-based digital lending platform for banks. While Numerated is an advocate for deploying technology to speed processing--that is, after all, what Numerated does for its lending institution customers--he's not convinced that lenders will adopt the SBA portal.
O'Malley says there are two reasons to not use the SBA portal. First, "you lose the ability to own the customer experience. If a customer gets halfway through the application, do you want them to call the SBA or do you want them to call you?" And second, he says, it may be cumbersome for banks to manage their own systems while also using the SBA's portal.
To wit: Lenders will still need to directly process all forgiveness applications for loans higher than $150,000. And they remain on the hook for making the ultimate forgiveness decision for loans under that amount. Lenders would still need to go into the SBA's system and review the loan applications from borrowers, he says. "It splits your work and it can get a little confusing."
Even so, the interim final rule on the subject of direct forgiveness just dropped on Wednesday, so some lenders may still be mulling it over, O'Malley says. In a poll of its 120 PPP lending clients, which he says was conducted a day earlier, about half of those that have not signed up said they wanted to look at the IFR before making a decision.
At least one lender is eager to tout its participation in the program, however. With more than 320,000 PPP loans with an aggregate value of $9.6 billion, Phoenixville, Pennsylvania's Customers Bank is the largest PPP lender to opt in so far. "This platform creates a better opportunity for there to be a trusted source for PPP forgiveness," says Sam Sidhu, the bank's CEO and president, referring to the early confusion among borrowers regarding whether they'd receive full forgiveness.
Of course, Sidhu is not immune to the potential for confusion innate in asking borrowers to use a brand-new platform. Those who have previously applied for loan forgiveness through Customers may chafe at having to use a different system, he notes.
"There are definitely some questions about added complexity," Sidhu says. But, he adds, "the fact that it's going to move really quickly on a government platform that's expected to be very intuitive and hopefully very quick, that's a positive enough experience. ... And if we can facilitate a seamless forgiveness process, then that really helps solidify our standing in their eyes."