September 22, 2020

By Caity Roach
Contributing Editor, Hot Topic Tuesday  

Hot Topic Tuesday — GAO Finds Lack of Clarity Surrounding PPP Forgiveness

On September 21, 2020, the U.S. Government Accountability Office (GAO) published its monthly report on federal COVID-19 relief programs. According to the report, the SBA has responded to the GAO’s June recommendations and has begun to develop oversight plans. However, since making those recommendations, the GAO has found additional areas of concern that require SBA action. 

Here are the key issues identified in the most recent GAO report:

  • The SBA has begun to develop oversight plans but has not yet finalized or implemented them. Therefore, PPP remains vulnerable to fraud.
  • Although over 56,000 loan forgiveness decisions have been submitted to the SBA, the Agency had still not developed its process for reviewing lenders’ forgiveness decisions as of August 14, 2020. 
  • The lender’s role in loan forgiveness remains unclear.
  • The resource demands and lack of clarity surrounding the application and forgiveness process have led to lender fatigue with the program, which could result in members being less likely to participate in future rounds of PPP.
  • The complexity of the loan forgiveness process creates an undue burden on forgiveness applicants and lenders. The review states a standard forgiveness application can take the borrower between 3-15 hours to complete. At which point, the lender may spend 50-72 hours reviewing complex forgiveness applications.
  • SBA lenders and CPAs are still advising borrowers to wait on submitting their forgiveness applications until SBA releases more guidance.

The GAO has not yet issued additional recommendations in light of these findings. However, its previous recommendations regarding oversight remain unresolved since the SBA has yet to finalize or implement their plans. 

GAO Report 20-701