This week, the U.S. Small Business Association launched a portal designed to speed up loan forgiveness for small business owners who have borrowed $150,000 or less from the Paycheck Protection Program (PPP) during the pandemic. If you’re a business owner who spent 60% of your loan on payroll, you likely qualify. Here’s what you need to know.
Which businesses qualify for PPP loan forgiveness?
As part of the CARES Act, the $953-billion Paycheck Protection Program provided small businesses loans with generous terms: If your business spent 60% of the loan on eligible payroll costs, and no more than 40% on eligible non-payroll costs, the loan can be forgiven (more details on eligibility for PPP loan forgiveness can be found here).
The portal can process these claims in less than 72 hours
The portal was created to address a glut of loan forgiveness applications from small business owners, the vast majority of which have loans under $150,000. Since many borrowers complained about the process being too complicated and time-consuming, the portal is meant to be a one-stop shop for speeding up forgiveness to less than 90 days—and in some cases less than 72 hours.
In lieu of documentation, if you’re a second-draw borrower with loans under $150,000, you can use the portal’s “COVID health score”—an automated process that verifies your company’s revenue using public and proprietary data from sources like foot traffic and business-to-business expenditures, per Inc.com. If your claim gets flagged by this automated process, you’ll need to upload documentation that proves your business lost 25% of its revenue in 2020 compared to 2019.
There’s one snag with the portal, however. While the Small Business Administration (SBA) is working on behalf of the banks to process these claims, many larger banks have opted out of the portal, as they prefer to handle the loans directly, according to the New York Times. If you aren’t able to find your lender in the portal, you’ll have to apply through them directly. Your lender should be able to provide guidance on filling out either the SBA Form 3508, SBA Form 3508EZ, SBA Form 3508S, or a lender equivalent.
How to apply for loan forgiveness using the portal