WASHINGTON–Numerous small businesses across the country are complaining their Paycheck Protection Program loans aren’t being forgiven as they had expected.
As CUToday.info has reported, both CUNA and NAFCU have pressed the Small Business Administration to expedite and clarify its rules around PPP loan forgiveness.
Numerous small business owners told Marketplace.org they were told by financial institutions they qualified for loan forgiveness, but then ran into problems having the loan forgiven and when they have contacted financial institutions and the SBA and could not get answers to emails or phone calls.
To date, 6% of borrowers who have applied for forgiveness have been told they must pay back some portion of their loans, according to the Small Business Administration — adding up to more than $27 billion. Meanwhile, half of borrowers have yet to finish the forgiveness process, Marketplace.org reported.
“Some of the hiccups were likely caused by the application process itself,” the report stated. “Three-quarters of borrowers found PPP terms and conditions difficult to understand, according to a study from the National Federation of Independent Business.”
Paperwork Glitches
Among the contributions to the glitches: the paperwork. Marketplace.org noted that since the PPP was launched, the Small Business Administration’s calculation guide has been updated three times. Its first draw application form has been updated nine times.
The SBA has acknowledged the program’s initial rollout has had problems.
“It felt, I imagine, for borrowers that there was a bait and switch underway, where the promise was forgiveness. But the practical reality of the agency’s rules regarding forgiveness were incredibly complex and scary,” Patrick Kelley, who has been associate administrator of the SBA’s Office of Capital Access since March, told Marketplace.org.
Kelley told the news outlet if borrowers filled out forms wrong or used the money outside the forgiveness guidelines, “ultimately the borrower is a debtor.”