U.S. government simplifies forgiveness process for smallest pandemic aid loans
NEW YORK (Reuters) - The U.S. government will greatly simplify the process of preventing borrowers from a $ 525 billion pandemic relief fund from having to repay some of the smallest loans, the Treasury Department said.
In a statement released late Thursday, the Treasury Department said that companies that borrowed $ 50,000 or less from the Paycheck Protection Program (PPP) could sign a one-page document stating that the money was spent as per the requirements of the program and the loans are granted, meaning that taxpayers' dollars are used to pay for them.
The PPP was launched in April to help businesses cope with the economic stalemate caused by COVID-19. She was responsible for 5.21 million loans, each ranging from less than $ 50,000 to more than $ 5 million. The rules stipulated that companies with limited funding options could apply for a loan that would later be fully granted when at least 60 percent was spent on payroll. The rest is used to cover expenses such as rent, mortgage interest or utilities.
Banks and corporations have complained that the PPP lending process initiated this month is too burdensome.
According to a September report by the Government Accountability Office, a watchdog of the US Congress, applying for a loan application could take 15 hours for some borrowers, and for a complex application, a bank could take 50 to 75 hours to review.
The Consumer Bankers Association, a trade group, welcomed the recent move but said more work was to be done.
"It is evident that action by Congress is needed to ensure the truly streamlined forgiveness that mom and pop businesses need," a statement said.
(Reporting by Koh Gui Qing; Editing by Nick Zieminski)
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