As a federally funded program, oversight has been integrated into its processes. Since most PPP loans were at least partially forgivable, the federal government and the Small Business Administration (SBA) needed to ensure funds were distributed, spent, and forgiven under the specified guidelines.
This article will explain the different types of SBA reviews for PPP loans and what happens if your loan is chosen for review. We’ll also cover the SBA’s requirements for documentation, noting what you need to keep on file and for how long.
What are SBA reviews for PPP loans?
The SBA has not performed a detailed review on all PPP loans after forgiveness applications are submitted. Instead, a sample of PPP loans are selected for two types of reviews:
1) Detailed review on a sample of PPP loans
The SBA performs a detailed review of a sample of PPP loans upon the submission of their forgiveness application. This type of review includes an examination of 1) the calculation of the original loan amount and 2) the requested forgiveness amount.
How do I know if the SBA wants to review my loan?
- If you received your PPP loan through NEWITY: Our team will notify you if the SBA selects your loan for review.
- If you received your PPP loan through another lender: Your lender should notify you if the SBA selects your loan for review.
What is needed from me if the SBA wants to review my loan?
- If you received your PPP loan through NEWITY: We will address any requests from the SBA on your behalf and reach out if any additional information/documentation is needed from you.
- If you received your PPP loan through another lender: Contact your lender to find out what is required of you during a SBA review.
2) “Post-Forgiveness Review” on a sample of PPP loans
The SBA also selects a sample of loans for a “Post-Forgiveness Review”. In this type of review, the SBA will review origination and forgiveness documentation to re-evaluate the forgiveness decision made on your loan.
How do I know if the SBA wants to do a Post-Forgiveness Review of my loan?
- If you received your PPP loan through NEWITY: Our team will notify you if the SBA selects your loan for review.
- If you received your PPP loan through another lender: Your lender should notify you if the SBA selects your loan for review.
What is needed from me if the SBA wants to do a Post-Forgiveness Review of my loan?
- If you received your PPP loan through NEWITY: We will address any requests from the SBA on your behalf and reach out if any additional information/documentation is needed from you.
- If you received your PPP loan through another lender: Contact your lender to find out what is required of you during a SBA review.
What does the SBA require after your PPP loan forgiveness application is submitted?
Whether or not your loan is selected for review, the SBA has requirements for all borrowers who received a PPP loan and/or applied for or received forgiveness. There are two categories of requirements depending on your loan size:
- $150,000 or less: The SBA requires that borrowers with loan amounts of $150,000 or less retain all employment records and payroll documentation for four (4) years and all other documentation for three (3) years after the date the loan forgiveness application is submitted.
- Over $150,000: The SBA requires that borrowers with loan amounts over $150,000 retain all supporting documentation for six (6) years after the date the loan is forgiven or repaid in full.
Make sure to calculate these required dates for your loan, mark them in your calendar, and retain all required documentation until the dates have passed.
How can I apply for PPP loan forgiveness if I haven’t yet?
Businesses have up to 10 months from the end of their PPP loan’s covered period to submit an application for forgiveness, known as the Payment Deferral Period. After that deadline, PPP loan payments are no longer deferred and borrowers will begin making loan payments. Even if the 10 month deferral period has expired, borrowers can apply for forgiveness any time up to the maturity date of the loan.
If you plan to apply for PPP loan forgiveness but haven’t yet, we recommend completing the process as soon as possible as most PPP loans are already past their deferral period.
If you received your PPP loan through NEWITY, you can easily complete your PPP forgiveness application in the Smart Portal. If the SBA ever chooses your loan for review, we’ll notify you, and be there to address any requests on your behalf.
To apply for forgiveness for your NEWITY PPP Loan, get started in our Smart Portal below
