On March 13, 2024, the Small Business Administration (SBA) issued a policy change regarding the Paycheck Protection Program (PPP) loan forgiveness application process. This change expands the Direct Borrower Forgiveness Platform (DBF Platform) to simplify the forgiveness process and to allow all PPP borrowers that have not yet received forgiveness to submit their loan forgiveness applications through the DBF Platform, regardless of their loan amount or PPP lender.
This policy change, which is effective immediately, is designed to support SBA’s ongoing efforts to locate PPP borrowers who have not yet applied for forgiveness and encourage them to do so, reinforcing SBA’s commitment to efficiency and support for small business owners.
The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) Section 1102 amended Section 7(a) of the Small Business Act to add a temporary product titled the “Paycheck Protection Program” to the SBA’s 7(a) Loan Program. The PPP was added to authorize existing SBA-certified lenders, federally insured credit unions, and additional lenders as determined by SBA and the Treasury that participate in the PPP to offer loans to provide small businesses with funds to continue to pay employees and to pay interest on mortgages, and to pay rent and utilities. The PPP authorized up to $349 billion and is implemented by the SBA with support from the Treasury.
Section 1106 provides for forgiveness of up to the full principal amount of qualifying PPP loans. On April 2, 2020, SBA issued the First PPP Interim Final Rule to outline the key provisions of Sections 1102 and 1106 of the CARES Act in formal guidance.
On July 30, 2021, SBA issued an Interim Final Rule on COVID Revenue Reduction Score, Direct Borrower Forgiveness Process, and Appeals Deferment. In this interim final rule, SBA implemented a direct borrower forgiveness process to provide PPP lenders with the technology platform to allow their borrowers to apply for loan forgiveness for loans of $150,000 or less directly to the SBA through the new portal that launched August 4, 2021.
When a PPP lender opted-in to the direct borrower forgiveness process, the DBF Platform provided a single secure location for (1) its borrowers with PPP loans of $150,000 or less using the electronic equivalent of SBA Form 3508S to apply for loan forgiveness, and (2) borrowers with PPP lenders that affirmatively opted-in to the use of the DBF Platform. As stated above, this procedural change expands the DBF Platform to allow all PPP borrowers that have not yet received forgiveness to submit their loan forgiveness applications through the DBF Platform, regardless of loan amount and PPP lender.
Upon receipt of notice that a borrower has applied for forgiveness through the portal, the lender reviews the loan forgiveness application in the platform and issues a forgiveness decision to SBA.
This update requires all PPP lenders to process forgiveness applications submitted via the SBA PPP DBF Platform. This includes those lenders who have established their own internal processes for PPP forgiveness. If a lender is using their own internal system, they must also review and decision any forgiveness applications received through the PPP DBF Platform. Note that lenders must also accept forgiveness applications from borrowers who are unable to use the DBF Platform.
To facilitate this policy change, SBA is automatically enrolling all lenders not currently participating in the DBF Platform. In accordance with PPP Loan Program requirements, if a lender receives a forgiveness application from a borrower after requesting guaranty purchase, the lender must submit its forgiveness decision to SBA.