With the SBA creating a new simple PPP Loan Forgiveness Application Form earlier this month for loans of $50,000 or less, more borrowers are now submitting their loan forgiveness applications to lenders. As a result, WBA has received a growing number of questions around PPP loan forgiveness over the last few weeks.
To help members, we created a special FAQ document focused just on this phase of the PPP process. The 36-page document is a compilation of questions and answers previously included in the WBA Master PPP FAQ document, as well as inclusion of additional guidance from SBA on forgiveness issued over the last few months. Other questions WBA staff have received that are not directly addressed in published guidance from SBA are also included in this special resource.
One area causing much concern among borrowers is the interplay between PPP loans and EIDL grants or loans. WBA has tried from the beginning to warn lenders and borrowers of this risk; however, now that we are at the forgiveness phase, reality is setting in. If a borrower received an EIDL advance, SBA is required by law to reduce the borrower’s loan forgiveness amount by the amount of the EIDL advance. This will mean that a PPP loan will not be repaid in full by the SBA even though the SBA agrees that the loan is fully forgivable because of this offset for any EIDL advance.
WBA is aware of situations where the EIDL grant amount exceeded the PPP loan amount. In those instances, while a PPP loan forgiveness application would be approved for full forgiveness, the amount remitted by SBA will be $0 essentially requiring that the borrower fully repay the PPP loan, with interest that has been accruing since loan origination.
WBA, along with many other state and national trade groups, is advocating for Congress to change this outcome; however, with the election a week away and other priorities surfacing for a lame duck session, it is unknown whether we will be successful.
By, Eric Skrum