When the May 2021 PPP loan forgiveness data was made available, we were surprised to learn the significant number of applications for forgiveness that had not been submitted to the lender and the SBA. As of May 24, 2021 the SBA reported that of the $521.2 billion of 2020 PPP volume, the amount of loans that had not yet applied for forgiveness was $159.1 billion.
With the July 30, 2021 data now available, the amount of PPP 2020 loans with forgiveness applied for has changed to:
$417.0 billion has been forgiven.
$23.7 billion is either under review or has not been forgiven.
Between May and June 2021 more PPP loans have applied for forgiveness, and the SBA has reduced the number of loans under review.
The amount of PPP 2020 loans that still need to apply for forgiveness has decreased from 30.5% of the total dollar of loans made and 33.0% of total number of loans made as of May 24, 2021 to 15.3% of the total dollar of loans made and 18.5% of the total number of loans as of July 30, 2021.
This table summarizes the 2020 loan program status as of July 30, 2021:
The 2021 PPP loan program participants have also begun to apply for forgiveness. As of July 30, 2021, 10.6% of the total dollar of loans made and 13.6% of the total number of loans made under the 2021 program have applied for forgiveness.
The PPP loan forgiveness statistics for the 2020 and 2021 programs combined show that almost 60% of the total PPP loans have already applied for forgiveness.
Looking beyond the totals, there are interesting statistics when reviewing forgiveness applications by loan size.
Of the total number of loans, 78.4% were for amounts $50,000 and under, and only 39.4% of those loans have applied for forgiveness.
The largest loans, those $2 million and over, still have 19% of the loans needing to apply for forgiveness. And, loans between $150,000 and $1,999,999 still have 40.3% of the loans needing to apply for forgiveness.
Next steps
The number of loans that have applied for forgiveness has increased during the two month period, and the amount of forgiveness applications approved by the SBA has increased. These are positive developments. However, almost $80 billion of 2020 PPP program loans have not applied for forgiveness, and $321.7 billion of total PPP loans still require the forgiveness approval process.
A rough estimate of timing for a 2020 PPP loan and repayment requirements would be this:
The PPP loan funds June 30, 2020.
The 24-week period to spend the money for eligible purposes ends approximately December 31, 2020.
The 10-month payment deferral period ends approximately October 31, 2021.
Loan payments need to begin in November 2021.
Using the rough timing estimate above, lenders would have between now and the end of October to contact this 2020 PPP borrower and identify the issues precluding loan forgiveness, begin the forgiveness process, or begin the repayment and recovery process.
The 2021 PPP loan recipients should also be working toward forgiveness. The SBA has improved the timing of forgiveness, and companies that borrowed under the 2021 program may be able to achieve forgiveness prior to the end of the 2021 calendar year.
Lenders need to evaluate their PPP loan portfolios immediately to begin to identify any risks, and put together a resolution plan for the 2020 PPP program loans. Lenders should also determine the borrower’s expected timing for 2021 PPP loan program forgiveness applications.