PPAI and several business groups have signed a letter to Congress in support of legislation in the U.S. Senate, S. 4117, that provides automatic forgiveness for Paycheck Protection Program (PPP) loans under $150,000.

The PPP was created by Congress as one of the key provisions of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which was passed in March. The emergency loan program has provided approximately $529 billion to more than four million small businesses, enabling them to keep employees on their payrolls and apply some of the loan funds to other approved expenses. S. 4117, which was introduced by a bipartisan group of senators, would allow small businesses to focus their time and resources on their companies, instead of spending significant time navigating the complex loan forgiveness process.

According a recent study, loan amounts under $150,000 comprise 85 percent of the loans approved under the PPP. S. 4117 would enable millions of small businesses to receive forgiveness by completing a simple one-page form, ensuring they can avoid the burdensome time and cost allocations associated with the current loan forgiveness process.

Data from the same study has identified an estimated benefit of issuing auto-forgiveness for various loan size thresholds. The combined resource requirements of operators’ time and/or third-party expenses represent an effective cost of $2,000-$4,000 for each business that applies for forgiveness, requiring 20-100 hours of focused time from key leaders of these businesses. With an average loan size of less than $19,000 for the smallest 60 percent of loans, this estimate would represent 10-20 percent of the loan amount itself, which is otherwise intended to support payroll, rent and other obligations necessary to keep businesses alive and ready to restart. In addition, the analysis suggests that the cost to businesses and lenders would be lower than the cost for the government to auto-forgive loans.