PPP Forgiveness Payment Reality Check

Beginning last week, WBA learned that bankers were starting to see payments made by SBA for PPP loan forgiveness applications previously submitted. This is certainly good news to start to bring closure to this program for business owners and lenders alike. With these payments arriving, however, WBA just learned that SBA will only pay loan interest from the first disbursement date (which may be different than your approval date), up to (but not including) the SBA’s decision date. Funds are then usually posted to lenders’ accounts within (2) business days of the decision date. As a result, there typically will be a shortage of interest reimbursed to lenders that lenders will then need to waive. If a weekend is involved, this shortage will include more than 2 calendar days’ worth of interest.  

In response to a WBA inquiry, SBA shared the above information along with the reminder that lenders should make sure interest is being calculated from the first disbursement date and not the approval date. In situations whereby the lender believes their shortage is greater than the normal (2) business days, SBA suggests that lenders work directly with the SBA forgiveness team, providing the loan number in any communication, so SBA can confirm the calculations and correct any mistakes.  

Finally, remember that the amount of any EIDL grant will be deducted from the forgiveness amount and SBA will only remit the difference back to the lender. In these instances, WBA also learned that at least as of right now, SBA is only remitting interest on the principal amount that equates to that difference and not on the entire PPP loan amount. 

By, Ally Bates