I have received many inquiries from clients regarding forgiveness of Paycheck Protection Program (PPP) loans. Here is the latest word:
- You need to apply for forgiveness of your PPP loans through your lender in order to avoid having to pay the money back. It is actually your lender who goes to the Small Business Administration (SBA) and asks for forgiveness. Once the lender is informed that SBA will cover the loan amount, the lender forgives your obligation to repay the loan to them.
- Each lender is handling this as they see fit with most lenders setting up an online portal to facilitate the process. However some lenders are much easier to deal with than others and some large lenders that I know of do not even have updated and functioning portals. Unfortunately, you must deal with whoever lent you the money in the first place so you have no options. If you are having difficulty, try reaching out to someone in your lenders “Commercial Lending Department”.
- The deadline (as of now) is December 31, 2020. This is the deadline for your lender to forward your completed application to the SBA. Your bank will need some time to review your application for accuracy and completeness before sending it to the SBA. The lender has up to 30 days to pass your application to the SBA. However most lenders report being able to pass the application on in 5-10 business days.
- Make sure the application you submit to the lender is as accurate and complete as possible and all backup documentation requested is submitted with the application. To be safe, I suggest getting the application to your lender no later than December 1st, and following up with the lender to make sure the completed application goes out to the SBA by December 31, 2020.
- Once the completed application from your lender is received, the SBA has 90 days to make a decision regarding forgiveness. Unfortunately, I know of a number of businesses whose applications were submitted over 90 days ago that have not heard anything yet. Be patient and expect delays.
- There is word in the lending community and in Washington that the deadline may be extended but nothing is official as of this moment. There is also word that the SBA may “automatically” issue forgiveness for all PPP loans of $50,000 or less. Again, this is not yet official but it is considered to be highly likely. However you will still have to apply for forgiveness to get forgiveness so nothing changes on your end.
Remember this is a brand new government program and, as you might expect, nobody knows exactly what is going on. The rules seem to change often and without much prior notice. However so far most of the rule changes seem to be of benefit to small business owners.
As always, I am here to help you in any way I can. Do not hesitate to give me a call at (732) 822-6890 (my cell) or email me at LeighKremer@verizon.net.
Leigh J. Kremer, CPA – “I make life less taxing”
I help clients reduce taxes, increase profitability, meet reporting requirements and save valuable time. Contact me to find out how!