WASHINGTON–Two banking industry trade groups have urged federal lawmakers to guarantee automatic forgiveness for Paycheck Protection Program loans under $150,000.
The groups, the Consumer Bankers Association and the Bank Policy Institute, said in a letter doing so would cut down on paperwork and save billions for the "nation's smallest small businesses."
In a statement, the CBA noted approximately 85% of all PPP loans would be eligible for this automatic forgiveness, adding that loans of less than $150,000 represent less than 26% of PPP loan dollars.
“Requiring the 3.7 million eligible PPP recipients in this category to simply verify funds were used in accordance with program guidelines, instead of completing lengthy forgiveness forms released by the Small Business Administration, would collectively save up to 70 million hours of paperwork for small business owners and approximately $7.4 billion, which could be allocated to reopening costs and other business measures,” the CBA stated.
Better Use of Resources
The letter adds, “These small businesses and their employees are the backbone of our nation’s economy and communities. Their time and resources would be better focused on getting the economy safely back up and running, not processing burdensome paperwork,” the associations wrote.
The CBA further argued a majority of these small businesses do not have full-time financial professionals on their payroll.
“These small business owners would be required to pay a third party or attempt to complete the paperwork on their own, which could take anywhere from 20-100 hours based on analysis from AQN Strategies,” the CBA said. “AQN also estimates each forgiveness application would average $2,000 per loan.”
A full copy of the associations’ letter is available here.