The Small Business Administration announced that it has forgiven 80% of the $791 billion in Paycheck Protection Program loans it began issuing in 2020 to businesses across the country to help them survive the pandemic.
Nearly 3,000 registered investment advisors, broker dealers and industry vendors took PPP loans, according to the Treasury Department.
The latest SBA forgiveness report stated the following:
• 81% of all PPP loan recipients have submitted forgiveness applications.
• 80% of all PPP loans have been fully or partially forgiven.
• Forgiveness has been requested for 85% of the total loan value of all PPP loans.
• 83% of been the total PPP loan value has forgiven, in full or in part.
In 2020, about 95% of PPP loan applicants submitted forgiveness applications and 93% of 2020 PPP loans, with a total value of $520 billion, were fully or partially forgiven. Overall, some 94% of 2020 PPP loan values has been forgiven, the SBA reported.
In 2021, 68% of loans with a total value of about $270 billion were forgiven, the SBA said.
The last deadline for applying for PPP assistance passed in May and there has been little indication Congress will pass additional PPP legislation.
The PPP program was designed to provide a direct incentive for small businesses to keep their workers on payroll, but given the significant recovery of the stock market, most fee-based advisory firms saw only short-term revenue decreases.
The government is now focused on investigating fraudulent activities surrounding PPP loans. Some $36 million in PPP loans received by RIAs allegedly violated loan limits, according to one recent study, which found that nearly a quarter of SEC-registered investment advisors eligible for PPP funds—2,999 out 12,643—received loans totaling more than $590 million.
Advisors received loan amounts much greater than payroll needs, the report found, and those advisors abusing the program were also “significantly more likely” to disclose a history of past fraud and/or regulatory misconduct, the report said.