We have prepared scores of forgiveness applications for our clients.

“What?”,  you ask?

Remember way back in April our government worked together (now that’s not a phrase we’ve often heard over the past four years) to pass a slew of laws that would help get America back on its feet after having been decked by the coronavirus pandemic. (Since then, the House has passed several extensions and improvements; the Senate under McConnell’s leadership (sic) has practiced being an ostrich; while TheDonald and his minions have flip-flopped routinely between wanting a bill or wanting to wait until after the election.)

One of those programs was the PPP- the Paycheck Protection Program. (You can search for PPP in the index in the right hand corner of this blog to see the conditions that surround this program.)   It was designed for small businesses (but was corralled by big business for the most part) to help keep their employees from being furloughed or laid off.

(Hmm. Maybe now it’s a good time to explain the difference between those two terms- since I never knew until recently what that difference was. When you are laid off- you no longer have any affiliation with your employer; you may or may not be rehired should economic conditions improve. Should you be furloughed, your insurance (in particular, your health insurance) benefits continue to apply- and should economic conditions improve, you are to be rehired.)

Most small businesses (the real ones, not the ones that either have 500 employees or some 75 employees in 50 different locations) have 2 to 10 employees. And, since the PPP covered 8 weeks of payroll (not to exceed $ 100K in annualized pay), that meant the PPP loan would not exceed $ 150 K. Actually, a great many of these loans were for $ 30K, for those with just a few employees making about $ 50K a year.

The PPP program delivered some $ 525 billion to about 5.2 million firms; that works out to be an average of about $ 100K per loan. This program closed on the 8th of August 2020, so even though there is still money in the till, no more will be loaned out.

The initial rules had stipulated that if you used 80% of the loan for salary and benefits (including unemployment taxes- but not employment taxes [Social Security and Medicare]), you would have your loan forgiven. Then, the rules were relaxed to 75% of the use proceeds. And, then, again, to let folks extend the loan amount for payroll expenses from 8 weeks to up to 24 weeks.

But, most banks- who really want to do as little as possible for these loans- have been refusing the forgiveness applications. These institutions are banking that the feds are going to automatically forgive all the loans with principal amounts of $150k or less.

And, now the SBA (Small Business Administration) has blinked. On the 8th of October, the SBA developed a new forgiveness form (jeez- now I have to redo all those forgiveness applications!)- and new rules (not created by Bill Maher, I might add) for loans with less than $ 50K of principal. That covers 70% of the loans (but nowhere near even ½ the total amount loaned under the program).

(Just so you know, the Consumer Bankers Association is still demanding that all loans under $ 150K be automatically discharged.)

Even though the SBA came out with this new application on the 8th of October, the deadline for submitting the applications for loan forgiveness is no longer the end of the year for the smaller loans. Nope- this new form due by Halloween.

Trick or Treat.  (No treat for me- I’ve got a lot of work to do!)

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