Iowa businesses with Paycheck Protection Program forgivable loans are now able to apply directly for loan forgiveness through an online portal.
The U.S. Small Business Administration opened the Paycheck Protection Program (PPP) Direct Borrower Forgiveness Portal Aug. 4. It has so far received 340,000 submissions from borrowers across the country who borrowed less than $150,000, according to a news release . Half of those loans have been approved for full or partial forgiveness , totaling more than $2.4 billion.
PPP borrowers can apply for forgiveness through the portal if their loans are through banks that have opted into the portal. Otherwise, they need to apply for forgiveness directly through the lender.
The administration sends borrowers whose lenders are participating in the portal a pre-populated forgiveness form they can complete using a computer or smartphone. The form takes an average of six minutes to complete, and borrowers can receive notice of the forgiveness decision within a week.
The administration has received more than triple the number of submissions than the top 10 PPP lenders who are not participating in the portal “putting us on pace to close out forgiveness for the 3.4 million direct forgiveness borrowers by the end of the year,” the release said. More than 1,230 PPP lenders, which account for more than 50% of outstanding loan forgiveness applications, have opted into the portal.
Before the portal opened, borrowers’ options were to complete and submit forgiveness forms they had downloaded or obtained from their banks.
“Some lenders had not yet built the technology or processes to even begin accepting forgiveness applications, and many did not actively reach out to borrowers to help them through the process,” the administration said in the release. “Forgiveness was not user-friendly, which is why millions of borrowers, including over 700,000 loans made in 2020, had yet to submit their one-page application.”
Nationwide, as of Aug. 15, 5.6 million businesses, which is nearly half of the 11,492,021 businesses that applied for loans in 2020 and 2021, have applied for loan forgiveness, and 5.27 million loans have been fully or partially forgiven.
The SBA was unable to provide state-by-state data for the number of applications for forgiveness, U.S. Small Business Administration Iowa District Office Lead Lender Relations Specialist/Public Information Officer Dave Lentell told The Center Square in an emailed statement. Of the 172,991 PPP loans made to Iowa businesses, 90,416 have been partially or fully forgiven as of July 1, Lentell said in the email.
“Iowa [businesses] that received a PPP and have not have yet applied for Forgiveness are encouraged to do so once they're able to demonstrate they've used all of their PPP Funds,” Lentell said.
The businesses have 10 months from the end of their PPP covered period to apply for forgiveness before they need to begin making payments on the loan. PPP loans have a 1% interest rate, Lentell said.
“If you get full forgiveness, SBA pays … the loan off in full, including principal and interest,” Lentell told The Center Square in a phone interview.
Iowa businesses can still apply for COVID-19 Economic Injury Disaster Loans through Dec. 31. Those loans, which do need to be repaid, carry a 3.75% interest rate over 30 years.
“Those are pretty good terms,” he said.
Businesses that are approved for the Economic Injury Disaster (LOAN) are not obligated to accept the loan “but you aren’t going to know your loan potential if you don’t apply,” Lentell said.
Lentell said businesses often call to ask if they are eligible for the economic disaster loans, but the SBA can’t make that calculation without receiving a loan application because there are “a number of” factors involved.
“We feel Iowa small businesses are pretty resilient, and we hope they are taking advantage of the programs that are out there to help the weather the impact of COVID-19,” Lentell said.
To apply for forgiveness of PPP loans through the portal, click here . Borrowers can attend a live webinar and Q&A session at 2:30 p.m. EDT (1:30 p.m. CDT) Aug. 26 or 2:30 p.m. EDT (1:30 p.m. CDT) Sept. 2 .
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