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Almost all PPP loans are forgiven with limited review

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Back in 2020, the U.S. government began issuing nearly $800 billion in potentially forgivable Payroll Protection Program loans as the COVID-19 shutdown threatened businesses. The program is designed to help small businesses keep employees employed during the uncertainty of the early days of the pandemic.

More than two years later, the vast majority of those loans have been converted to government grants, as 91 percent have been fully or partially forgiven, according to an NPR analysis of data released Oct. 2 by the U.S. Small Business Administration.

The SBA expects that number to grow to nearly 100 percent as more forgiveness requests are processed this fall.

Although researchers at the University of Texas claim that about 1.4 million PPP loans show signs of possible fraud, such as suspiciously high wages and multiple businesses listed at the same residential address, SBA disputes these findings, but its inspector general estimates that at least 70,000 loans may be fraudulent.

In the meantime, the SBA is closely examining whether a small fraction of the millions of PPP loans qualify for fraud and forgiveness. The SBA uses a computer model to review all 11.4 million loans, according to Patrick Kelly, a senior official at the agency, but he said auditors have only manually reviewed about 215,000 loans, or about 2 percent of the total number of loans issued.

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Of those hands-on reviews, only about 21,000 loans, or just 0.2 percent of all loans originated, were denied forgiveness, Kelly said.

Whose loans haven’t been forgiven?
Of the 11.4 million PPP loans, about 1 million remain unforgiven. The majority of these non-forgivable loans are held by sole proprietors and independent contractors: single-person businesses are the specific targets of the next round of the program. Many work in services heavily impacted by COVID-19, such as hairdressers, janitors, and Uber drivers.


Many businesses that have received loans through fintech companies rather than traditional banks told NPR that they have had difficulty getting forgiveness.

Fintechs are known to be businesses that use newer technologies to provide financial services.

A fintech company called Kabbage is facing a class action lawsuit over claims it failed to process loan forgiveness applications quickly and correctly. Last week, Kabbage filed for bankruptcy.

NPR contacted dozens of small businesses with outstanding loans and heard from them about various other reasons they still haven’t received forgiveness, from missed emails or botched applications to bad advice from accountants.

But the SBA says some of these PPP borrowers simply haven’t applied for forgiveness yet because many of them could have waited up to five years after their loans were disbursed.

At a Senate committee hearing in August, Kelly said the SBA has already processed forgiveness decisions for about 97 percent of the loans issued in the program’s first year, 2020. the figure for 2021 loans is behind 85 percent, but Kelly told NPR he expects most of the remaining loans to be forgiven this fall.

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