SBA Issues Rules on PPP Loan Forgiveness, Lender Responsibilities

May 26, 2020

As reported in a Newsbytes special edition over the weekend, the Small Business Administration on Friday night released much-anticipated interim final rules describing the loan forgiveness process, as well as lenders’ and borrowers’ responsibilities, for the Paycheck Protection Program.

For PPP loans to be forgiven under the rules, lenders must confirm that they received the borrower certifications in the loan forgiveness application form and the borrower documentation required by the form. They must also confirm the borrower’s calculations on the forgiveness application. “Lenders are expected to perform a good-faith review, in a reasonable time, of the borrower’s calculations and supporting documents concerning amounts eligible for loan forgiveness,” SBA said, noting that “minimal review” of calculations based on a payroll processor’s report would suffice.

“If the lender identifies errors in the borrower’s calculation or material lack of substantiation in the borrower’s supporting documents, the lender should work with the borrower to remedy the issue,” SBA added. However, the rules do not require the lender to “independently verify the borrower’s reported information if the borrower submits documentation supporting its request for loan forgiveness and attests that it accurately verified the payments for eligible costs.”

Lenders must report their decisions on forgiveness applications to SBA within 60 days of receiving a complete application and must provide supporting documentation for their decisions. The rule on the forgiveness process includes details on several technical questions related to employee status, payroll calculations and forgiveness-eligible non-payroll expenses. ABA staff are reviewing these rules closely and will provide feedback to SBA. To share questions or comments with ABA, email

As of Friday, a total of 4.4 million PPP loans have been made totaling more than $511 billion over two rounds of funding. The average PPP loan size is $115,713.

Read the rule on the loan forgiveness process.
Read the rule on lender and borrower responsibilities.

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