Many of the region's largest lenders say they have hit the pause button on processing forgiveness applications for Paycheck Protection Program loans mostly in anticipation of the Small Business Administration switching to new forgiveness forms next month.
Banks this applies to said they've communicated the pause to customers, but some of that might have been lost in translation. Some small businesses I've spoken to indicate they're unclear on the status of forgiveness on first-draw loans and whether the forgiveness process could be holding up approval of a second PPP loan.
As far as second-draw loans go, the SBA does not require someone's initial loan to be completely or partially forgiven before processing the second, and most lenders don't seem to be requiring this, either.
Of course, the potential for having PPP loans possibly 100% forgiven is one of its core draws. Some borrowers returned PPP loans last year out of concerns with having to repay anything at all, even at a 1% interest rate.
Some borrowers are fretting about the status of their loan forgiveness.
An outlier, Huntington Bank said that is has not yet paused forgiveness processing — it continues processing both forgiveness and second-draw loan applications — but it will for a point later this month as the SBA officially switches to new forms.
Per a company statement from Huntington that it posted online: Effective March 5, the SBA will stop accepting the 3508 and 3508EZ forms that were released on June 16, 2020, and only accept the versions released on January 19, 2021. As a result, the following forgiveness portal access limitations and closures will occur:
• The portal will close to new 3508 and 3508EZ applications beginning February 19, 2021. Borrowers who have applications already in process will still be able to access them.
• The forgiveness portal will be shut down entirely beginning February 26 and reopen again on March 5.
A KeyBank spokesman said the bank continues to work with clients on new applications and to "complete forgiveness applications before the forgiveness deadline later this year" but did note forgiveness processing is on hold for now and will "resume in the coming weeks, so that businesses can proceed in a timely fashion."
PNC Bank has paused forgiveness processing for now.
"We are currently working to update our PPP loan forgiveness application portal to reflect new guidance released from the SBA a few weeks ago," said PNC spokeswoman Marcey Zwiebel in a statement. "Based on this new guidance, we are updating our portal to implement a streamlined forgiveness process, primarily to borrowers with loans less than $150,000. In the interim, we have paused submitting new forgiveness applications to ensure that borrowers have access to the most enhanced, up-to-date process. We have committed to e-mail our clients and customers once we are ready to resume sending invitations to apply for forgiveness under the terms provided for in the new guidance. We also will contact directly those who already have applied for PPP loan forgiveness, if additional information is required based on the new guidance."
Fifth Third Bank paused forgiveness processing Feb. 1. JPMorgan Chase Bank paused on Jan. 27.
"We aren't accepting new PPP forgiveness requests or resubmissions right now while we make updates based on new guidance from the (SBA)," said Jennifer Roberts, CEO of Chase Business Banking, in a statement. "This should make it much easier for many borrowers with loans of $150,000 or less. Also, borrowers with loans greater than $150,000 may be able to include additional eligible non-payroll expense types."
Citizens Bank said it paused taking new forgiveness apps when it started accepting requests for second-draw loans, which for most banks began Jan. 18 and lasts through March 31. A spokesman said forgiveness processing should resume in the "coming weeks."
A spokesman for US Bank said it, too, has paused forgiveness processing but the company anticipates reopening its forgiveness portal in early March as the SBA begins accepting forgiveness applications under the new rules.
For a quick summary of the changes SBA has been making to the PPP forgiveness rules and forms, check out this post from the Journal of Accountancy or go right to the source at the SBA for more information.
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Many large PPP lenders in Northeast Ohio have hit pause on forgiveness processing - Crain's Cleveland Business
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