Loan forgiveness: Online warning for pandemic relief

Dan Krauth Image
Thursday, May 6, 2021
Small business owners can now apply for loan forgiveness to wipe out PPP loan debt
Small business owners can now apply for loan forgiveness to wipe out at least some of the debt from PPP loans during the pandemic.

NEW YORK (WABC) -- One major bank is putting checks and balances in place when it comes to applying for pandemic relief after 7 On Your Side Investigates started looking into an issue with the online application process.

It's good news for the owner of an art auction business in Chelsea who called 7 On Your Side for help.

"Now they're enthusiastic about helping me, Channel 7 made the whole difference," said David Killen.

For the thousands of small businesses who received federal pandemic loans last summer, it's time for many of them to start paying those loans back. They can ask for forgiveness to get some of the debt wiped out, but the process isn't always easy.

Back in June, art auctioneer David Killen says customers weren't coming to his Chelsea showroom to buy art.

"They were certainly questioning the point of buying something when they might not be alive in three months," said Killen.

He applied for and received what's called a Paycheck Protection Program loan through the U.S. Small Business Administration. More than 5,000 small business owners in his Chelsea ZIP code alone applied for and received the same type of loan.

"It was a tough time and the money was appreciated," said Killen.

He received $50,000 to help pay salaries of his staff members and to pay other business-related bills.

"It was a godsend," he said.

A year later, business is picking up. And small business owners can now apply for loan forgiveness to wipe out at least some of that debt.

Killen went to Chase bank's website, the bank in charge of administering his loan, to submit his application.

"It was fairly straightforward it just said how much forgiveness are you asking for out of the $50,000 and I typed in $50,000," he said.

A few days later he received good news - his application was approved. But, it was only approved for $50. There were three zeros missing.

"It's a horrible $50,000 misunderstanding," Killen said. He attributes that to a computer typo or glitch. And the company has a policy that the application can only be submitted once.

"They called me back and said we can't do anything, they said there's nothing we can do," said Killen.

Killen called 7 On Your Side Investigates and we called Chase. A company spokesperson said they're now working to fix the problem and they put more safeguards in place online to prevent it from happening again.

JPMorgan Chase sent a statement that states:

"We've reached out to the SBA to try to resolve this for our customer. For customers applying for forgiveness, we remind them - both on our website and as they're applying - to double check the amount that they put in before submitting. We haven't seen a systems issue that would cause this situation."

When we reached out to the federal government, a spokesperson for the U.S. Small Business Administration said the responsibility falls with the bank.

"Lenders were granted delegated authority by Congress to act as an agent of the government in collecting, approving, disbursing and processing PPP loans. Borrowers apply to their lender for forgiveness."


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