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partial forgiveness of a PPP loan

In 2020, The Paycheck Protection Program quickly became a lifeline for many small businesses impacted by the pandemic. While the SBA was applauded for the program’s quick rollout, there have been many issues and roadblocks along the way for borrowers. The program has seen continuous eligibility and rule changes, leaving borrowers questioning their eligibility and how to receive total loan forgiveness. Many business owners have been frustrated after receiving notice of partial forgiveness of a PPP loan. 

It has been nearly two years since the PPP was rolled out; where does it stand now?

PPP forgiveness stats

Here’s a quick summary of the numbers to date:

  • The SBA handed out 11,430,137 loans in 2020 and 2021, totaling nearly $790 billion. 
  • The program has provided $691.6 billion in forgiveness payments across 9.6 million to small businesses across the country. 
  • The agency has received over 9.7 million forgiveness applications and 4,766 lenders have requested forgiveness for all PPP loans. 

The issues microbusinesses are facing with their PPP loans

While many small businesses have had their PPP loans forgiven, microbusinesses are seeing a greater challenge when applying for loan forgiveness. Because of their size, in most cases, they do not have a staff accountant or lawyer to assist with proper record keeping in order to keep up with the ever-changing loan requirements. Because of this, many microbusinesses failed to receive total loan forgiveness or only received partial forgiveness. The SBA has issued a Procedural Notice for loan recipients who received partial forgiveness, providing guidance on the appeal process.

How to appeal partial forgiveness of a PPP loan

If you choose to appeal the SBA’s partial forgiveness decision, you must notify the lender within 30 days from receipt of a lender’s post-remittance notification. Once the lender has been notified, the lender must then file for a loan review on behalf of the borrower within five days. This process also applies to borrowers whose lenders have prevented them from applying for full forgiveness from the beginning.

For borrowers who received a partial forgiveness notice previously, lenders should notify borrowers of the policy change. Once the borrower has received a policy change notification, the borrower then has 30 days to notify the lender that they would like to appeal their partial forgiveness.

The policy change arose after small businesses became increasingly vocal over the confusion of eligible expenses and lack of lender knowledge of forgiveness requirements. The SBA estimates that the appeal process should take no longer than 90 days to complete. 

Beware of ongoing PPP and EIDL scams

Although these programs have officially closed, bad actors continue to prey on business owners with promises of additional funding and huge tax deductions. If you get an email from a firm claiming to want to help you get more aid money or take an usual deduction on your tax return, get a second opinion. If an offer sounds too good to be true, it probably is.

If you have questions regarding your PPP loan, please don’t hesitate to reach out to our team of business CPAs. We can ensure your books are in order, giving you all of the information you need to apply for full forgiveness of your PPP loan. 

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