SBA debuts quicker PPP forgiveness process but many banks aren't participating

The federal government will forgive Paycheck Protection Program loans directly starting next month, though some borrowers may not be eligible because their lender hasn’t agreed to the new online program.

The U.S. Small Business Administration, which oversees the PPP, said Thursday it would begin accepting forgiveness applications for loans of $150,000 or less on Wednesday. That threshold accounts for more than 90% of PPP borrowers.

Previously, the federally guaranteed loans were forgiven by the banks and other private lenders that made them between April 2020 and May 31, when the program ended. SBA would then review the lenders’ decisions.

The PPP, Washington’s marquee COVID-19 relief program for businesses and nonprofits, was intended to forestall layoffs during the pandemic. Nearly 12 million loans, totaling $800 billion, were made, according to federal data.

"These entrepreneurs are busy running their businesses and are challenged by an overly complicated forgiveness process," SBA administrator Isabel Casillas Guzman said on Thursday. "We need to deliver forgiveness more efficiently."

But borrowers can only use the agency's new forgiveness program if the lender who made their loan agrees – and many have not, according to a list provided by the agency.

Among the top 10 PPP lenders on Long Island, only Celtic Bank Corp. has opted into SBA's new program.

The largest lender locally, JPMorgan Chase, is "evaluating all aspects of the process and meanwhile [we] continue to encourage our customers to apply for forgiveness through our platform," said bank spokeswoman Briana Curran. She said 75% of Chase’s PPP loans from last year have been forgiven.

Chase made 15,028 loans during the first round of PPP in April-June 2020 in the four congressional districts that encompass most of the Island. TD Bank was No. 2 with 6,392 loans, followed by Bank of America, 5,630; Citibank, 3,750; and the former BNB Bank, now part of Dime Community Bank, with 3,522, according to a Newsday analysis of SBA loan data.

Kevin Gallagher, who oversees SBA lending at Dime in Hauppauge, said it wouldn’t be opting into SBA's new forgiveness program.

"We are very far down the line with our forgiveness process," he said on Thursday. "It is an efficient process that is working. We didn’t want to confuse our customers by bringing in a new process this far down the road," he said.

Dime and BNB Bank merged last year in a $489 million deal. Together, they made $1.8 billion in PPP loans on Long Island and in New York City, according to executives.

Bank of America spokesman Bill Halldin said it's "reviewing" the new SBA forgiveness program but introduced a "simplified portal" of its own in February. He said the portal "has been well received, with more than 75% of clients already completing the forgiveness process."

TD Bank officials praised the SBA initiative but said they have no plans to join it. "TD Bank has a robust digital PPP forgiveness portal in place and we plan to continue to serve our customers' PPP forgiveness requests directly through our own portal," said Chris Giamo, head of TD's commercial banking operation.

SBA's new forgiveness program comes as $279 billion in first-round PPP loans, or 54%, have already been forgiven. Payments, including 1% interest, are only owed on $1 billion in loans so far.

Forgiveness applications for first-round PPP loans are due this summer. Forgiveness applications for second-round PPP loans are due later. Newsday received a $10 million loan in April 2020.

More information may be found at directforgiveness.sba.gov.

By James T. Madore

james.madore@newsday.comJamesTMadore

James T. Madore writes about Long Island business news including the economy, development, and the relationship between government and business. He previously served as Albany bureau chief.