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Banks welcome PPP loan forgiveness portal, but not all are rushing to use it

The Small Business Administration's Paycheck Protection Program loan forgiveness portal is up and running, but not all banks are rushing to log on.

The portal opened Aug. 10 and was generally welcomed by bank executives interviewed by S&P Global Market Intelligence. Many said it offered clear procedures and provided an effective interface between the SBA and financial institutions.

"We were ready to go this morning," said Cyrene Wilke, head of the operations and technology team at Investors Community Bank in Manitowoc, Wis., on the day of the launch.

Financial institutions must submit their decisions on their customers' loan forgiveness applications to the SBA within 60 days of rendering their verdicts. Investors Community Bank opened its application process July 1, according to David Coggins, executive vice president and chief banking officer.

Wilke said the online forgiveness process is "night and day" compared to the PPP loan application process in April, which she described as a "nightmare." She said the portal's process for documenting forgiveness requirements — like showing that 60% of a borrower's loan went toward payroll expenses and 40% went toward overhead costs — is "well outlined."

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Meanwhile, other banks are holding off from accessing the portal.

The SBA released a 43-page guide on how to use the portal on Aug. 7, and Michele Vervlied, head of SBA operations at Customers Bancorp Inc. in Pennsylvania, said her bank will take more time to scrutinize the instructions so that they fully understand the process.

"This is a week of decision-making on when and how to open up our application process," Vervlied said. "Forgiveness is a complicated process, and we want to make sure we have all our ducks in a row."

Moreover, uncertainty surrounding future PPP-related legislation, including the proposal to automatically forgive PPP loans under $150,000, has forced some banks into a holding pattern.

William "Billy" Carroll Jr., president and CEO of SmartFinancial Inc. in Knoxville, Tenn., said 85% of his bank's PPP loans would be automatically forgiven under the proposed legislation. Thus, SmartFinancial has decided to wait for the dust to settle on Capitol Hill before submitting forgiveness applications.

Michael Budinger, a principal with financial institution consulting firm Crowe LLP in Chicago, said he expects some delays from his clients while they assess the portal and their borrowers' needs but that most will eventually make use of it.

"There certainly seems to be more communication this time around with the SBA," he said. "They have tried to make the process as seamless as possible."

"It's a lot more user-friendly. It's fairly explicit in terms of what's required and what's not required," Budinger said, lauding the "all-encompassing platform" that gives users the ability to monitor the status of their applications.