If you experienced an emergency, you likely would call 911 without giving much thought to the medical bills that would follow. It seems as though many business owners were left with a similar mindset as they tried to secure a lifeline for the health and survival of their businesses earlier this year.
As the COVID-19 pandemic crossed the US borders and the American economy saw a hit; companies of all sizes seemed to leap at the opportunity for a PPP (Paycheck Protection Program) loan from the SBA (Small Business Administration). While this potentially forgivable loan seemed to be the knight riding in a white horse to save the day (and payroll) the process was met with a variety of emotions.
The PPP, along with the EIDL, provided incredible financial relief for businesses. The low-interest loan could very well be forgiven, but we’ll deal with that later. The money came at a time when consumers were staying home and not spending. The PPP money was meant to keep Americans working at a time when revenue losses were sweeping the nation.
In the first round of funding, what was intended to help small businesses found its way to larger organizations in huge amounts of money. Millions of dollars found its way to chains, hotels, and other large companies that depleted the fund and ultimately leaving small business owners in the dust. After public outcry, many of the larger recipients returned their PPP loans.
The next issue was from businesses upset with knowing their business may not survive after the 8-week timeframe and they would be left with a potentially hefty loan payment. Congress responded by extending the period to 24-weeks. Congress continues to rework the plan that was clearly put together rapidly to help the economy during an unprecedented time.
Now, business owners are worried that they will not meet every-changing loan forgiveness requirements. As the deadline for PPP loan forgiveness applications approaches, lenders are communicating with loan recipients. Some are reporting that the SBA will not accept the applications until August 10th. Whatever the date, you can go ahead and have your application ready to submit to your lender. In the meantime, Congress is discussing forgiveness for any PPP loan under $150,000. During this very fluid situation, just be prepared to submit a thoroughly completed application. Your lender or financial professional can help answer questions to ensure you provide the most accurate information with your PPP loan forgiveness application. If you have not secured a PPP loan for your business, an additional round of funding is currently open. You can apply until August 8, 2020.