2021-46: SBA simplifies loan forgiveness for most borrowers - Spidell

2021-46: SBA simplifies loan forgiveness for most borrowers

Effective immediately, the SBA is providing additional Paycheck Protection Program (PPP) loan forgiveness simplification for borrowers of $150,000 or less by allowing:

  • Second-draw borrowers who still have to substantiate their 25% reduction in gross receipts to use a COVID-19 Revenue Reduction Score as an optional method to prove their revenue reduction (rather than providing tax forms, quarterly financial statements, or bank statements); and
  • Lenders to choose to let borrowers to submit their loan forgiveness application directly to the SBA via a portal. (This portal is not yet available, but the SBA anticipates it will be available shortly.)

Second-draw loan borrowers with loans of $150,000 or less were given the option to self-certify that they met the 25% gross receipts threshold when they took out their loans. Those that took this option must submit documentation proving they meet the 25% gross receipts reduction test when they submit their application for loan forgiveness.

These borrowers may now satisfy this requirement using a new COVID-19 Revenue Reduction Score. The score uses a variety of data inputs including industry, geography, and business size. The scores will be accessed through the SBA. Lenders who are processing applications will have access to this data, as will borrowers who are applying directly with the SBA-provided portal for loan forgiveness. At this point, there is no separate website to access scores, or information on the scores.

If the score validates at least a 25% gross receipts reduction, no additional documentation will be required. But if the score does not support a 25% gross receipts reduction, borrowers can provide additional documentation to the lender or the SBA to prove the requisite revenue.

California borrowers: Though the FTB has stated they will follow SBA and Treasury guidance regarding the gross receipts test, it is unclear whether they will also allow use of this score to validate a taxpayer’s eligibility for taking deductions for amounts paid with forgiven PPP debt under AB 80. We have requested guidance from the FTB on this issue.

The full text of the interim final rule is available at:


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