Although Paycheck Protection Program (PPP) Loan forgiveness is a hot topic on the minds of borrowers and the CPAs who advise them, experts are saying borrowers should not rush to apply for forgiveness.
Many are still waiting for the U.S. Small Business Administration (SBA) and Treasury to provide many FAQs about the PPP forgiveness process. In addition, the loan forgiveness application has not even been updated yet to reflect the recent five-week extension of the program’s deadline to Aug. 8.
What’s the Hold-up?
A big reason for these delays is that Congress is debating a new round of COVID-19 relief, which is expected to include a second PPP initiative more targeted than the first one. Those discussions also may include major changes relaxing the forgiveness requirements for the smallest loans, possibly those up to $100,000 or $150,000.
Even if the FAQs do come out, the SBA issued a procedural notice on July 23rd that indicated it would not begin accepting PPP forgiveness submissions from lenders until a new software-as-a-service platform currently under development goes live Aug. 10. The SBA said if new legislation changes the forgiveness process in ways that require changes to the new platform, the launch may be delayed.
The important PPP forgiveness deadline is 10 months after the end of the loan’s covered period. At that point, if the forgiveness forms have not been submitted, the funds officially become a loan that needs to be repaid. It’s best for borrowers to take their time and make sure they have as much information as possible, so they can maximize loan forgiveness. Many business owners may want to rush to put forgiveness behind them, but there are still many unanswered questions.
While all of the final touches are being put on PPP Loan forgiveness, one thing is definite: documentation is critical. It’s important that you keep documentation for anything related to your PPP loan, and what you did with the funds.