Update – PPP Loan Forgiveness
Between the uptick of reported positive COVID cases, political uncertainty, and a host of other issues in 2020, PPP forgiveness may not be near the forefront of your thoughts, or it’s on your to-do list and you’d really like to get it checked off and move on to the next task that you need to tackle. Applying for PPP loan forgiveness is akin to a flashing yellow light. You don’t have to stop at the flashing yellow light, but you should reduce your speed and proceed with caution as you move forward.
Based on the advice of the AICPA, banking industry, and multiple professional sources, we believe that borrowers should not rush to apply for forgiveness.
Simply put, there are two major reasons that borrowers should wait:
1. Congress currently has two proposed Acts in the works; they are hoping to pass an Act before going on recess on August 8, 2020. The two proposed Acts, the Heroes Act and the Heals Act, have varying degrees of relief but may include major changes to the forgiveness requirements for smaller PPP loans.
This is potentially BIG for the smaller PPP loans. The proposed Acts have referenced a threshold of $150,000 for reducing the requirements for loan forgiveness. According to the SBA website, 86.5% of all loans were for less than $150,000 based on approvals through June 30, 2020.
2. We are still waiting for the U.S. Small Business Administration (SBA) to issue FAQs that will clarify many PPP-related issues.
This process has been dynamic since its inception and will continue to be so; we’ll provide updates as they are made available to us.
If you have any questions, please feel free to reach out to us. We’re here to help; count on us!