The Small Business Administration is preparing to launch a streamlined application portal that will allow Paycheck Protection Program borrowers with loans of $150,000 or less to apply for forgiveness through the SBA.
As the coronavirus crisis Paycheck Protection Program ends, the Small Business Administration reported that this year 859 credit unions made almost $5.6 billion in loans to businesses to help them weather the pandemic.
The Small Business Administration’s Paycheck Protection Program has run out of money for loans that most credit unions and banks would make, but PPP loans are still available through Community Development Financial Institutions, an SBA spokesperson said Wednesday.
According to the Government Accountability Office, the Small Business Administration has not conducted a comprehensive assessment of the risks of the Paycheck Protection Program because of the need for a rapid execution of the program. The GAO does not consider this an acceptable excuse and noted that an independent auditor reported multiple problems with the loan program.
The Small Business Administration’s Inspector General has issued a report finding that in the first batch of Paycheck Protection Program loans last year, 4,260 borrowers got two PPP loans when they only should have received one. The SBA intends to not forgive those duplicate loans, but to prevent duplication from happening again, the SBA has added controls that are causing delays and a logjam in loan processing this cycle, raising concerns that businesses will be caught without a loan when the program ends on March 31. The House has now passed legislation that would extend the PPP to the end of May.
The Biden Administration has been studying the Paycheck Protection Program loan processes and has made some changes designed to smooth the process, cut down on fraud, and give the smallest businesses access to the loans. For two weeks beginning on Wednesday, PPP applications will be limited to businesses with fewer than 20 employees. Other changes have been made to the program too.
The second iteration of the Small Business Administration’s Paycheck Protection Program is operating much more efficiently than the first version, credit union trade groups said, but added that they continue to run into persistent problems that hamper lenders and borrowers.
Credit union trade groups report that the Small Business Administration and the Treasury Department are still failing to anticipate problems with the Paycheck Protection Program rollout and are still playing catch-up with issues. Nevertheless, the trade groups also report that this rollout has gone a lot smoother than in the past.
The Inspector General of the Small Business Administration warned that during the earlier Paycheck Protection Program lending, businesses on a Treasury Department “Do Not Pay” list were approved for $3.6 billion in loans. It is not clear how much of the money was actually distributed.
The new Paycheck Protection Program starts with initial lending limited to businesses who have not received a PPP loan and lending going through Community Development Financial Institutions, Minority Depository Institutions, certified development corporations and microlenders. After a few days the lending options open further.