March 1, 2022
SBA Hot Topic Tuesday – 98% of Forgiven $2 Million or More PPP Loans Not Paid by SBA Yet
“As of May 12, 2021, SBA exceeded the 90-day requirement to remit forgiveness payment for 98.2 percent of loans $2 million or greater with a processed loan payment,” reads the SBA Office of Inspector General’s most recent report. “The Government Accountability Office (GAO) reported that on average SBA completed its determination and remitted loan forgiveness payments for loans over $2 million in 181 days.”
Out of more than 3 million loans with remitted forgiveness payment, about 2% of the loans did not have completed remittance within 90 days. There are over 111,000 loans with forgiveness payments that are currently in process, and of those loans, the remittance of 41.7% was not completed in the given 90-day-period.
“The uncertainty borrowers and lenders face could potentially impact business and lending decisions they make. While the overall percentage of loans exceeding the 90-day requirement may be low, over 107,000 borrowers were affected and waited more than 3 months for remitted forgiveness.”
In response, the SBA revised their initial review process for all PPP loans of $2 million or greater so that the SBA would not have to manually review each PPP loan. The OIG recommended that the SBA develops a plan to ensure remaining forgiveness reviews and remittances are completed within 90 days, along with taking immediate action to complete reviews currently in process that are close to or over 90 days. This recommendation is currently under a resolved status and can be closed once SBA provides evidence that their changes have been implemented.
Also noted in the report, SBA needs to monitor PPP loans with outstanding loan forgiveness applications. As of October 31, 2021, there were 402,000 loans that did not have a lender-submitted forgiveness application. This number could be an indicator of fraud, and loans that have passed their covered period will have up to 10 months to file for forgiveness or begin making payments.