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PPP forgiveness: What you need to know

After 14 months and nearly 6.9 million applications nationally, the Paycheck Protection Program stopped accepting new applications at the end of May.

Since then, the focus among businesses, banks and the U.S. Small Business Administration has shifted toward the next phase – and most notable feature – of the program: getting those forgivable loans converted into grants, provided the businesses met the requirements of the program.

Eve Paz, a server, and Kris Lopez, the manager at Bosque Brewing’s Market Station Public House in the Santa Fe Rail Yard, pour beers for customers during a soft opening Wednesday September 16, 2020.                                                                                     (Eddie Moore/Albuquerque Journal)

And for businesses that applied early in the program, the deadline to avoid making payments on the forgivable loans is coming up quickly.

So far, it seems like businesses have gotten the message. New Mexico-specific data on loan forgiveness isn’t available, but nationwide, about 3.3 million 2020 loan applications have been forgiven, totaling about $279.4 billion, according to the SBA.

However, about 1.7 million applications, totaling $159.1 billion, haven’t yet been received by the SBA, so there’s clearly still room for improvement. Program experts say forgiving the remaining 2020 PPP loans, along with most of the 2021 loans, is likely to be a full-time job for the foreseeable future.

“I expect our forgiveness team will be very busy,” said Metta Smith, chief lending and client experience officer for DreamSpring, a community development financial institution based in Albuquerque.

When the federal program launched in early April last year, a crush of businesses moved quickly to apply for funding, initially overwhelming the system. Once the dust settled, those early businesses had to apply for forgiveness within 10 months following an initial covered period. For businesses that applied early in April, that would put the deadline in the middle of July.

“I think we’ll be dealing with this for another year,” said John Garcia, district director for the SBA in New Mexico.

To qualify to have the loan forgiven, businesses must show that at least 60% of the proceeds from the grant were spent on payroll costs, while demonstrating they were able to maintain their employee base and compensation levels, according to the SBA. Garcia said a wide variety of materials, from payroll documents to lease agreements, can be used to show compliance. Businesses just beginning the process should begin by meeting with the lender they worked with to secure the loan, Garcia said.

Even before the deadline started closing in, New Mexico businesses that received PPP funding early in the window started getting busy with forgiveness applications.

Ben Williamson, controller for Bosque Brewing Co., said he spearheaded the company’s effort to get its approximately $1.1 million loan forgiven shortly after joining the company this February. Williamson said starting with a new company made it more challenging to track down the materials he needed to show compliance. Still, he said the process was relatively straightforward once he had all the materials in place. The company submitted its forgiveness application in mid-April, and the SBA had fully forgiven it by May, Williamson said.

“It’s a big relief,” he added.

Overall, lenders have reported that businesses are generally engaged and on the ball. Smith of DreamSpring said earlier this month that about 90% of its first-draw borrowers working with DreamSpring have applied for forgiveness. Of those, Smith said about 70% did so proactively. To reach the rest, DreamSpring began calling, emailing and texting applicants to make sure they’re engaged. The lender even began emailing individualized login links to businesses with their application information to streamline the process, Smith said.

“It really limits the amount of effort that they have to put into the application,” she said.

Alan Shettlesworth, president and CEO of Main Bank in Albuquerque, said about 90% of the bank’s first-draw PPP loans have been fully forgiven, with most of the remainder currently going through the process. After an initial slowdown during the spring, Shettlesworth said the SBA sped up its approvals significantly when the calendar switched to June.

Garcia of the SBA stressed that borrowers can still apply for forgiveness after they begin paying the loan, and doing so will allow them to avoid future payments. Some lenders, including Main Bank, are also willing to work with borrowers who have to make payments before their loans are forgiven.

“We’re not trying to kick (borrowers) when they’re down,” Shettlesworth said.

Stephen Hamway covers economic development, health care and tourism for the Journal. He can be reached at