T he historic Paycheck Protection Program has been a lifeline for small businesses across America throughout the COVID-19 pandemic. In late March, the Small Business Administration reported more than 8 million loans have been issued to small businesses, totaling more than $700 billion. However, like all loans, PPP loans are beginning to come due, and lenders now must navigate the ever-evolving labyrinth of loan forgiveness rules in order to stay in compliance.

The Consumer Financial Protection Bureau and the SBA jointly issued an interim final rule amended to reflect the rules established by the passage of the Economic Aid Act on December 27. Along with outlining the forgiveness application process for borrowers, the rule also lays the foundation for lenders to comply with PPP loan forgiveness. Requirements include:

• What the lender should review.
• How the lender should determine forgiveness amounts.
• How the lender should communicate forgiveness decisions to the SBA and the borrower.

Regulators will be expecting lenders to follow these requirements for first and second draw PPP loans, although the requirements are not very explicit and may be difficult to interpret (stop me if you've heard this before).

What to review?

When a borrower submits a loan application for forgiveness, the borrower must certify that the information submitted is complete and accurate. Thus, as a lender, your first responsibility when reviewing a submitted application is to confirm that the borrower has completed this certification. If the borrower has failed to certify, you should follow up with the borrower and explain that the SBA will not accept their forgiveness application without this certification.

If key fields on the application are not filled out (such as forgiveness amount requested, eligible payroll and non-payroll amounts, covered period, etc.), notify the borrower to complete the missing items and send the application back.