The SBA recently provided an update on businesses that have sought and obtained forgiveness of their PPP loans. These results include:
- Out of the 11.4 million loans, totaling $788 billion, 88% have been forgiven in full or in part
- That translates into roughly 10 million, totaling $725 billion in total forgiveness, with $721 billion being paid out
- One troubling result is that the percentage with the fewest percentage of submissions is loans of $50,000 or less, with 86.3% submitted
- 5% of loans $50,000 – $150,000 have been submitted
- 1% of loans $2 million or more have been submitted
- 95% of 2020 loans have been forgiven
- 81% of 2021 loans have been forgiven
- As of mid-February, lenders had received 36,500 requests from lenders to purchase delinquent PPP loans
It is anticipated that the number of delinquent PPP loans will spike in the coming months as the balances due convert to repayment terms. This will, in turn, result in a corresponding increase in the number of requests from lenders to purchase delinquent PPP loans. Some lenders estimate that eventually, upwards of 10% of PPP loans could end up being delinquent, some due to fraud, while others due to inattention or other challenges facing borrowers. Small businesses that obtained $50,000 or less are typically those with less sophisticated owners that may find it challenging to compile the basic information needed to seek forgiveness. Therefore, any clients that have not submitted the necessary documentation to achieve forgiveness should be strongly encouraged to do so, especially given that their PPP loans will soon be converting to repayment terms just as businesses are facing the specter of rising inflation.
