PPP Loan Forgiveness Update

Diane Glover

Jul 29, 2020

We understand that many PPP borrowers are anxious to get started with the loan forgiveness process for a variety of reasons. Our Covid-19 team has kept completely updated on all guidance issued and stands ready to advise our clients on the forgiveness process at the appropriate time.

Why is PPP loan forgiveness delayed?

PPP lenders have generally taken a cautious approach to the PPP forgiveness process – and for good reason. If proper forgiveness procedures are not followed, the SBA could deny its guarantee and the lender could be left “holding the bag.”

On July 23, the SBA issued a procedural notice which outlined the process for lenders to submit forgiveness decisions to the SBA. Lenders will be able to access an SBA platform to submit forgiveness information beginning August 10, 2020. Significantly, the notice stated this date is subject to extension if new legislation requires changes to the system.

There are several pieces of legislation that have been proposed that would significantly impact the PPP loan forgiveness process, allow for additional loans, and expand the definition of covered expenses. A bill introduced by Senator Marco Rubio (Chairperson of the Senate Small Business Committee) would greatly simplify the forgiveness process for the vast majority of PPP borrowers.

Under Rubio’s proposal, loans for $150,000 or less would be forgiven by a very simple certification of the borrower. There has been a separate proposal floated to forgive these loans without the need for any forgiveness application. Loans of more than $150,000 but less than $2 million would have an intermediate level application and would have to submit limited information to the lender. For these loans, borrowers would still need to accumulate the required documentation and maintain it for three years.

We emphasize that these are proposals. These provisions may never become law or may look significantly different than these proposals. If these or similar simplification procedures do become law, borrowers could potentially save time, effort, and money. We emphasize again that neither of these current proposals eliminates the need for borrowers to accumulate and maintain required documentation. Work will still be required.

What do PPP Borrowers do now?

Given the potential impact of these changes and given that the SBA portal will not be open for two weeks, we are encouraging PPP borrowers to remain patient with regards to forgiveness and see what develops over the next several days. We understand there may be unique situations where it will make sense to move the process ahead immediately. We are ready to move forward in those situations.

Please contact your Kirsch CPA relationship manager if you have additional questions.