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Big News! SBA Issues New Guidance on Loan Forgiveness

By: Mary Jones

Traveling knowledge

About the Interim Final Rule

new Loan Forgiveness Requirements and Loan Review Procedures pursuant to an Interim Final Rule, or IFR (the PPP Forgiveness IFR).

Process and Procedures

The lender must issue an approval or denial (in whole or in part) of a borrower’s loan forgiveness application to the SBA no later than 60 days from the receipt of the loan forgiveness package from the borrower

New Forgivable Nonpayroll Expenses

Covered operations expenditures (including costs for software for business operations); (ii)  Covered property damage costs (including for vandalism or looting not covered by insurance)

No Update for Larger PPP Loan Borrowers

The SBA had released prior forms and instructions for PPP borrowers of $2 million or more, as we previously discussed here.

COVID-19 and CARES Act Update:

PPP loans are 100% federally guaranteed loans for small businesses intended for companies to maintain their payroll levels and allow partial loan forgiveness.

The SBA Loan

United States Small Business Administration supports small businesses across the country by offering learning resources and funding opportunities

What Is an SBA Loan?

SBA loan of $150,000 or less comes with a guarantee of up to 85%. The SBA loan guarantee for loans over $150,000 is up to 75%.

Who Needs SBA Loan Forgiveness?

Your spousal benefit will be 50% of your spouse’s benefit if you start payments at full retirement age or older. The full retirement age varies by birth year and is usually age 66 or 67

SBA Loan Forgiveness Program Work?

Business owners defaulting on their SBA loan can apply for loan forgiveness, but that does not guarantee the SBA will approve the request.

How Does the SBA Collect Debt?

The Treasury Offset Program (TOP) recovers the debt through the business or guarantor’s income tax refund. Rather than receive the expected tax refund

Drawbacks to SBA Loan Forgiveness?

if you cannot refinance your SBA loan and need loan forgiveness, understand that it comes with a few drawbacks.

Don’t Try to Resolve SBA Loan Issues Alone

Applying for SBA loan forgiveness may seem like a better idea than filing for Chapter 7 bankruptcy, but not always. Every lender and loan is a bit different