WASHINGTON – The Small Business Administration will begin forgiving loans to small business owners under the Paycheck Protection Program, the Treasury Department said on Tuesday, following complaints from banks and borrowers that the process had stalled.

The government plans to approve and pay the pardon requests by the end of the week or early next year, a Treasury spokesperson said. Applications should generally be approved quickly, with the exception of loans over $ 2 million which will be subject to further review.

Business advocates, banks and lawmakers have raised concerns that the process of turning loans into grants is too complex and slow under the $ 670 billion federal program, designed to help small businesses. companies to respond to the economic fallout from the pandemic with government-guaranteed repayable loans distributed by banks.

“The ultimate success of the program will depend on forgiveness, so small business owners are eager to learn more about [Treasury officials’] decisions, ”said Kevin Kuhlman, senior director of government relations for the National Federation of Independent Businesses, which advocates for small businesses, adding that the group welcomes the development.

Since she launched an online portal for loan remission In early August, the Small Business Administration received more than 96,000 applications from companies seeking to have their loans canceled, but none had been approved, said William Manger, chief of staff and associate administrator of the SBA.

These requests represent about 2% of the 5.2 million loans, worth $ 525 billion, issued under the program before it expires on August 8.

The Treasury announcement comes amid a crescendo of calls for more help for small businesses as many continue to fight the impact of the Covid-19 pandemic.

About $ 130 billion in unallocated PPP funding remains since the program expired last month, but lawmakers have yet to agree on how it should be used for further relief for small businesses. The key policy under discussion is to allow small businesses particularly affected by the crisis to receive second PPP loans, a step that would require the cancellation of their first loans.

Separately, House and Senate lawmakers introduced legislation to streamline the remittance of PPP loans under $ 150,000, granting a blanket rebate to borrowers with a simple certification that the funds were used as directed.

Banking lobbies and some small business advocacy groups are pushing the legislation, fearing the pardon process is too onerous.

“It’s actually more complicated than any of us thought,” said Jack Murphy, president of business banking at

Citizens Financial Group,

speaking at a Consumer Bankers Association conference Tuesday. “It takes us two weeks to process a request. Four to six contacts between small business owners… and people trying to process pardon requests.

Black small business owners have encountered obstacles in accessing the paycheck protection program. Here’s how the African-American owners of MahoganyBooks in Washington, DC, kept their small businesses afloat. Photo: Zach Wood for The Wall Street Journal (originally published June 12, 2020)

Treasury Secretary Steven Mnuchin told Senate lawmakers last week that he would support simplified pardon, but legislation is needed. He also said the administration would seek to monitor loans for fraud.

Meanwhile, Mr Mnuchin urged business owners to apologize if they are prepared to do so.

“I would encourage them to act quickly and fill it out and not wait for legislation,” he told a Senate banking committee on Thursday.

While some recent surveys have shown that sentiment among some small businesses has rebounded, many continue to struggle.

According to a survey conducted in late August by the NFIB, one in five small businesses said they would have to close their doors if economic conditions did not improve over the next six months. The majority of PPP borrowers surveyed, 84%, said they have now used all of the loans they had previously received, and 44% said they would apply for or re-apply for a second PPP loan if it became available.

According to

Bark Inc.,

As of August 31, 163,735 U.S. businesses on its review website have closed since March 1, a 23% increase from July 10. Some 60% of these businesses have closed permanently.

Write to Yuka Hayashi at [email protected]

Corrections and amplifications
The Small Business Administration makes decisions about loan forgiveness from the Paycheck Protection Program. An earlier version of this article incorrectly stated that the Treasury Department would start forgiving small business loans. (Corrected September 30.)

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