SBA Unveils PPP Loan Forgiveness Application for Borrowers
Ever since the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was passed in March of this year, the Paycheck Protection Program (PPP) has proven to be a source of both hope and frustration for small business owners. Despite some lenders reportedly delaying the opening of their application processes due to late-arriving guidance, the initial $349 billion in PPP funding was tapped in less than two weeks. Making matters worse, it soon emerged that a few publically traded businesses such as Shake Shack and Ruth’s Chris had been approved for millions of dollars of relief before the program’s money ran out (both companies later agreed to return their funds). Now, with the second round of PPP funding still in play, borrowers are getting a first look at the form that will be used to determine if their loan is forgivable.
Late last week, the Small Business Administration released the Loan Forgiveness Application for PPP loan along with instructions for the form. While the SBA says it will soon issue regulations and guidance for borrowers and lenders, they did announce some measures intended to help business owners better navigate compliance. For example, borrowers will have the option of utilizing an “alternative payroll covered period” that aligns with their typical payroll cycle and will have flexibility to include both payroll and non-payroll expenses incurred in the eight-week period following the arrival of their PPP funds. Also notable is that SBA added an exemption from business owners who made “good-faith, written offers” to rehire workers that were then rejected.
Although the SBA’s press announcement said that the agency had included “detailed instructions,” some have begged to differ. In particular the American Institute of Certified Public Accountants (AICPA) noted that small businesses needed better guidance as to when the eight-week loan forgiveness period should start. Alternatively they proposed that the said period should be extended. In a statement, CPA.com president and CEO Erik Asgeirsson stated, “It’s clear the application form and instructions provided yesterday are not enough. Some of the most pressing issues are not addressed and in other areas it appears new questions have arisen.”
In fairness, putting a program together as large as PPP turned out to be is a tricky task — let alone doing it on the fly. To that point, it’s worth remembering that the original $349 billion that the SBA blew through in two weeks amounts to more than the agency typically loans out over the course of more than 14 years. Nevertheless, the stress and frustration expressed by small business owners over the lack of guidance is certainly understandable. After all, these funds and their forgiveness may well make the difference between them continuing on or being forced to close for good. So while the release of the Loan Forgiveness Application is a good next step, hopefully the SBA will be able to dot their i’s and cross their t’s as soon as possible so that small business owners can finally breathe a little easier.