Over the weekend, the Small Business Administration (SBA) released the Paycheck Protection Program (PPP) Loan Forgiveness Application. If you have received a PPP Loan, this document provides detailed directions on how to complete the form that you will eventually have to give your lender to be considered for full or partial forgiveness.
While this form doesn’t say “draft,” there is a good deal of speculation that the rules, and thus this form, may change. According to an article in the May 18, 2020 Wall Street Journal, “Lawmakers and government officials are preparing to make significant changes to the Paycheck Protection Program, amid cooling demand for government-backed loans and criticism from business owners who say they can’t tap the funds. The changes are likely to include giving businesses more flexibility to spend the money, according to lawmakers and others following the deliberations. Under the original terms, 75% of the funds were required to be spent on employee salaries for the loans to be forgiven.”
Another potential adjustment being considered is extending the time to spend the loan money beyond two months, shifting the program’s focus from keeping employees on payroll to a broader definition of keeping small businesses afloat. This is due, in part, to the fact that many businesses may have received their loans but haven’t been able to re-open. Even those that are able to open their doors haven’t begun to return to any semblance of normal yet.
While broad changes would require Congressional approval, changing the percentage of the loan that must go toward payroll does not since it wasn’t part of the initial mandate in the CARES Act.
Business owners should expect further changes and clarification, and we will update you as soon as official word comes down the pike. In the meantime, we recommend that you continue to collect your documentation so you can apply for forgiveness when needed but keep an eye out for changes that may impact what you have to provide and when you have to provide it. And, as always, if you need any help or have questions, call or email us and we’ll be happy to provide any guidance we can.