Though the Small Business Administration has forgiven about 60% of the nearly $ 793 billion in Paycheck Protection Program loans approved in 2020 and 2021, the process hasn’t always gone smoothly.
The SBA’s relationship with community banks appeared to take a turn for the worse last week after the chairman of the Independent Community Bankers of America accused the agency of threatening to audit banks that don’t adopt the direct forgiveness portal the agency unveiled Aug. 4.
“We and other PPP lenders received an email from the SBA informing us that to avoid lender audits we are encouraged to opt into direct forgiveness,” Robert Fisher, who also serves as president and CEO of the $ 547.6 million-asset Tioga State Bank in Spencer , New York, told lawmakers Wednesday during a virtual House Small Business Committee hearing.
In a copy of the email obtained by American Banker, the SBA said it would be “conducting independent outreach and audits on lenders who have not actively communicated to borrowers on the availability of forgiveness. This outreach will be primarily focused on those lenders who are not participating in Direct Forgiveness, “the name of its portal.
Read Also
- Claudio Bravo’s cover that saved Betis from losing the derby against Sevilla at the last minute Nov 7, 2022
- Wanderland, the mobile application that wants to pave the way to the metaverse Nov 16, 2022
- 1518: How to obtain information on road traffic Aug 12, 2021
- 25 years in prison for assailants who robbed and set fire to a home in Mulchén Nov 19, 2022
- Drone owners will have proof to legally fly in the US Jul 24, 2021
- You may be pleasantly surprised by the price of the Galaxy Note 20 Ultra Jul 13, 2020
- Twitter: Elon Musk Reinstates Donald Trump’s Account Nov 20, 2022
“To avoid these lender audits, we would encourage you to opt into direct forgiveness and maintain an active and aggressive outbound campaign to your PPP borrowers,” the email said.
Fisher wasn’t pleased with this wording. “We resent the coercive tone of this email,” he said.
PPP forgiveness has been a hot-button issue for lenders and lawmakers throughout the program’s 18-month existence. The SBA’s initial attempt to manage forgiveness came in May 2020, when itreleased the first forgiveness application. The 11-page application was immediately criticized as too long and complicated by groups representing PPP lenders and borrowers, many of whom advocated for blanket forgiveness, at least for smaller loans.
Rep. Roger Williams, R-Texas (left) said the SBA’s forgiveness portal doesn’t measure up to the work done by the private sector. Nydia Velazquez, DN.Y., said the portal has helped inform more businesses about how they can apply for PPP loan forgiveness.
Bloomberg
Ultimately, Congress streamlined forgiveness on PPP loans of $ 150,000 or less in the Dec. 27 Economic Aid Act. Lawmakers authorized a one-page application that asked borrowers to break out loan proceeds spent on payroll expenses and attest to their compliance with the program’s rules and regulations.