The Small Business Administration appears to have made significant headway streamlining its process for Paycheck Protection Program loan forgiveness, which drew complaints through last year and early 2021.
Previously, the process worked best for large PPP lenders with the resources to create in-house portals. However, as many as 1,500 small lenders had made little or no investment in a technology platform to support forgiveness, the SBA estimates. For them, loan forgiveness risked becoming “a national paperwork exercise,” that a new SBA portal, launched Aug. 4, aimed to resolve, Patrick Kelley, the SBA’s associate administrator for the Office of Capital Access, said in an interview.
In just two weeks, the
“We’re averaging five days between the time the application is submitted, the lender decides, and we take out the note,” Kelley said.
Throughout 2020, PPP lenders and borrowers lobbied the agency and Congress to streamline the forgiveness process, complaining that the initial application forms were cumbersome and time-consuming.
The success of the new portal — which is restricted to loans of $150,000 or less — has contributed to a substantial uptick in the pace of PPP forgiveness. Between July 31 and Aug. 15, the SBA reported receiving more than 555,000 applications. Over the same span, the dollar volume of forgiven loans increased by $26.6 billion, to $471.1 billion.
From a forgiveness standpoint, the 10 business days since the direct portal was launched have been the busiest since SBA began accepting applications in August 2020, Kelley said.
“From Administrator [Isabella Casillas] Guzman’s perspective, allowing lenders to focus on the capital needs of their borrowers is a higher priority,” Kelley added.
According to the SBA, it takes borrowers about six minutes to complete the application using the direct portal. Approximately 60% of the applications it has received have come from a mobile phone, “which demonstrates how accessible [the portal] is, that you can just click through the application on your phone,” said Nicola Montagna, special advisor at the SBA.
The $19.6 billion-asset Customers Bancorp in West Reading, Pennsylvania, which made approximately 325,00 PPP loans for $9.5 billion, had its own forgiveness portal, but it decided quickly to funnel its remaining 2021 PPP loans to the SBA’s portal for forgiveness.
“A government portal gives borrowers a lot of comfort,”
If Sidhu is correct, Customers would be a huge beneficiary as more and more PPP loan payouts are redeposited into its coffers.
“Our capital ratios will skyrocket,” Sidhu said. “Then we'll have an ability to redeploy that capital into higher-yielding assets.”
Fountainhead Commercial Capital in Lake Mary, Florida, another high-volume PPP lender, was another early adopter of the portal. Fountainhead had submitted more than 31,000 applications, according to CEO Chris Hurn.
Like Customers, Fountainhead is using the SBA portal to process its 2021 PPP loans.
“We think we can reach 65% to 70% forgiveness by year end if we continue at this pace,” Hurn said. “That would please us greatly.”
The $4.2 billion-asset First Internet Bancorp in Fishers, Indiana, opted not to use the SBA portal, but only because it’s come close to achieving forgiveness on the approximately 450 PPP loans it originated on its own. First Internet expects to complete forgiveness for its 2020 PPP loans by October, while more than a third of its 2021 loans have started the process, said Phil Kryder, vice president of special projects.
Kryder, however, called SBA’s portal “an impressive achievement … I think it's going to help small businesses, especially if they've got a lender that doesn't have SBA expertise or an automated portal and might try to do this manually."
A total of 5,467 lenders participated in the Paycheck Protection Program, and about 1,200 are using the SBA’s forgiveness portal. The agency is eager to see that number grow. Kelley wants lenders to sign on even if they already have an in-house portal.
“It’s great to look at your shiny technology and say we spent some money on this, but ultimately why don’t you do yourself a solid and let the government take it from here,” Kelley said.
