NEW YORK (Reuters) – The U.S. government will dramatically simplify the process by which borrowers of a $ 525 billion pandemic relief fund will not have to repay some of the smaller loans, the Treasury Department said .
In a statement released Thursday evening, the Treasury Department said businesses that have borrowed $ 50,000 or less from the Paycheck Protection Program (PPP) can sign a one-page document certifying that the money has been spent as required by the program and the loans will be forgiven, meaning that taxpayer dollars will be used to pay them off.
Introduced in April to help businesses weather the economic crisis caused by COVID-19, PPP was responsible for 5.21 million loans ranging from less than $ 50,000 each to over $ 5 million. The rules stipulated that companies with limited financing options could apply for a loan that would later be written off entirely if at least 60% were spent on payroll – the rest going to cover expenses such as rent, interest on mortgage or utilities.
Banks and businesses have complained that the PPP loan forgiveness process, which began this month, is too onerous.
According to a September report from the Government Accountability Office, a US congressional watchdog, a loan forgiveness request could take 15 hours for some borrowers, and a complex request could take 50 to 75 hours to be reviewed by a bank.
The Consumer Bankers Association, a professional group, welcomed the latest move, but said there was more work to be done.
“It is obvious that congressional action is needed for the real streamlined forgiveness that moms and dads businesses need,” he said in a statement.
Koh Gui Qing report; Editing by Nick Zieminski