NEW YORK (Reuters) - The U.S. government will greatly simplify the process by which borrowers of a $525-billion-pandemic-relief fund do not have to repay some of the smallest loans, the Department of Treasury said.
In a statement issued late on Thursday, the Department of Treasury said businesses that borrowed $50,000 or less from the Paycheck Protection Program (PPP) can sign a one-page document attesting that the money was spent as required by the program and the loans will be forgiven, meaning taxpayers’ dollars will be used to pay for them.
Introduced in April to help companies weather the economic shutdown brought on by COVID-19, the PPP was responsible for 5.21 million loans ranging from less than $50,000 each to more than $5 million. The rules stipulated that businesses with limited financing options could seek a loan that would later be fully forgiven if at least 60 percent was spent on payroll - with the rest going to meeting expenses such as rent, interest on mortgage or utilities.
Banks and businesses have complained that the forgiveness process for PPP loans, which started this month, is too onerous.
According to a September report by the Government Accountability Office, a watchdog for the U.S. Congress, a loan forgiveness application could take some borrowers 15 hours to complete, and a complex application could take a bank 50-75 hours to review.
The Consumer Bankers Association, a trade group, welcomed the latest measure, but said there was more work to do.
“It is apparent Congressional action is needed for the true streamlined forgiveness mom-and-pop businesses need,” it said in a statement.