PPP loan forgiveness: Checklist of key considerations for lenders

The U.S. government's Paycheck Protection Program (PPP) has allocated hundreds of billions of dollars in federally guaranteed loans to help businesses maintain or restore their payrolls throughout the COVID-19 pandemic. In a few months, loan forgiveness applications will start coming in, but lenders should begin preparations now.

The checklist below covers key issues for banks and credit unions to consider during this unprecedented time. It also includes specific recommendations from our specialists about the best ways to help borrowers to get through the complex forgiveness process.

Note: Loan forgiveness guidance is not finalized. Details may change in the coming months – monitor sba.gov for further updates and final guidance.

1. Overall approach for strategic communications

Communicate with borrowers before their forgiveness requests come in.
Use personalized messaging that facilitates a simple, intuitive customer experience.
Centralize communications and align them to key talking points and available tools.

2. Frequency of communications

Have a communications plan that encompasses the full six-month loan payment deferral period.
Determine the right cadence and consistency of messages to borrowers.
Stage communication in an attempt to avoid an overload of requests when forgiveness is available.

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3. Setting up a consistent customer experience

Create a single point of reference outlining your organization’s forgiveness processes and overall stance on the program.
Develop personalized digital forms with clear instructions for borrowers.
When distributing communication materials to borrowers, include qualifying language that indicates forgiveness is subject to all terms and criteria contained in the interim final rule(s) and program guidance.

4. Supporting borrower calculations and documentation

Create a digital portal that allows for two-way communication, data inputs, and uploading of supporting documentation for an audit trail.
Deploy a loan forgiveness calculator with simplicity in mind, featuring protected fields, error checking, clear instructions, and multiple examples.
Anticipate changing the calculator based on further PPP guidance from the SBA – and ensure your borrowers are aware of those updates.

5. Addressing borrower inquiries and challenges

Provide a summary page of calculations that’s aligned to both your portal and tracking system for easy inputting of data.
Expect your borrowers to seek guidance from you and do your best to predict specific areas in which they’ll need help.
Set up support centers with professionals trained to respond to common questions and concerns.

6. Planning the review process for payroll and other expenses

Account for time spent going back and forth with borrowers to clarify what can and can’t be included for appropriate documentation of expenditures.
Prepare your files with clear documentation of activities and decisions in case the SBA audits your loan files for forgiveness review and analysis.

7. Meeting SBA requirements and getting approvals

Collect and organize evidence of disbursements and payment of expenditures in anticipation of stringent SBA documentation requirements.
Prepare for an SBA audit of any forgiveness decisions for borrowers receiving a PPP loan, specifically loans in excess of $2 million.
Expect servicing of PPP loans to be handled the same way as traditional SBA loans, including reporting and default handling.

8. Accessing the SBA advance purchase facility

Anticipate that the SBA advance purchase facility will be accessible and that there won’t be extra scrutiny of forgiveness decisions for advance purchase loans.
Use a consistent methodology for expected forgiveness involving certifications and calculations to avoid confusion or concern on the part of the SBA.