The Paycheck Protection Program’s forgiveness portal has debuted, leaving bankers and their borrowers with a big decision.
Those who participated in the $659 billion program must determine if they are ready right now to navigate the complex system for having loans forgiven, or if it makes sense to wait and see if Congress intervenes and simplifies the process. That decision was complicated over the weekend when talks about a new round of stimulus collapsed, casting doubt on when — or if — PPP will get an overhaul.
A number of banks, including JPMorgan Chase, the program’s biggest participant with $29.2 billion in PPP originations, plan to hold off on processing applications. The $3.2 trillion-asset banking giant will start the forgiveness process next month, said Kimberly Hooks, a vice president at Chase Business Banking.
JPMorgan Chase is backing a push for automatic forgiveness “as it would help thousands of small business owners get back on their feet,” Hooks added.
Holtmeyer & Monson in Memphis, Tenn., is taking a similar wait-and-see approach with the 12,000 PPP loans it is servicing for 450 banks.
“We had hoped today to actively start taking applications, but we made the decision to hold off,” said Arne Monson, the firm’s president and a co-founder. “We’re hoping like hell we get automatic forgiveness for loans of $150,000 and below, and maybe a streamlined [process] for those up to $2 million.”
An SBA spokeswoman confirmed Monday that the agency’s platform began accepting forgiveness applications on schedule, though she did not provide any statistics on opening-day activity.
The SBA stopped accepting applications for new Paycheck Protection loans on Saturday, after Congress failed to extend the program’s operating authority. Lawmakers are considering a number of proposals for a revived PPP, including increased funding and letting the hardest-hit small businesses obtain a second loan.
Lenders’ willingness to procrastinate, even if it means delaying resolution of billions of dollars in loans, comes as little surprise to many industry observers.
The SBA approved about 5.2 million PPP loans for more than $525 billion before the portal’s closure. The program offers low-interest loans to small businesses impacted by the coronavirus pandemic. Funds spent on basic operating expenses are eligible for forgiveness, making the program even more attractive to struggling entrepreneurs, but the process has been rocky, characterized by delays and unclear guidance.
The forgiveness process has been stressful for borrowers and lenders.
The SBA did not release a forgiveness application until mid-May, nearly six weeks after it began approving loans. A month later, following criticism that the original 11-page application was too long and complex, the agency released a streamlined form for self-employed borrowers and those…