Small Businesses Face Even More Confusion About PPP Loan Forgiveness
The Paycheck Protection Program (PPP) was supposed to be a temporary solution. When the program rolled out in the spring, policymakers, business owners, and consumers alike, were hoping and expecting that everyone would be back to work and leisure by Labor Day, if not by the Fourth of July, but that is not how things have turned out. As the road to economic recovery became longer and more arduous, an increasing number of business owners are counting on the loan forgiveness option that came with the PPP loans to help their businesses survive. Others have decided to get out of their business activities entirely and have found a buyer willing to purchase the company, but they need to get their PPP loans forgiven before they can complete the sale. If you own one of the many businesses still in limbo over PPP loan forgiveness, contact an Alabama small business lawyer.
Applicants for Loan Forgiveness Get Radio Silence from the SBA
The Paycheck Protection Program has succeeded at its goal of saving jobs; according to Zachary Warmbrodt of Politico, the loan money has kept millions of people employed at jobs where, if it had not been for the loans, their employers would have had no choice but to lay them off. In the spring and early summer, banks across the United States have disbursed more than half a trillion dollars in PPP loans; it distributed these among more than five million small businesses. The plan was for the Small Business Association (SBA) to reimburse the banks for PPP loans that they forgave.
On August 10, the Small Business Association (SBA) began accepting loan forgiveness applications. So far, 96,000 businesses have applied for loan forgiveness, but the SBA has yet to respond to any of the applications. Brad Bolton, president of Community Spirit Bank in Alabama, said that he does not know of any banks that have received a decision from the SBA either accepting or denying the applications. Meanwhile, some banks have requested that the SBA simplify the loan forgiveness process, especially for the smallest businesses, defined as those whose PPP loans are valued at $150,000 or less.
When One Form of Relief Counteracts Another
About 20 percent of PPP loan recipients also received Economic Injury Disaster Loans (EIDL). These borrowers are now facing an additional dilemma. With EIDL loans, a portion of the loan amount was a grant. The SBA is now saying that, if applicants for PPP loan forgiveness received grants through the EIDL program, they must subtract the amount of the EIDL grant from the amount of PPP loan money eligible for forgiveness. In other words, many business owners are in for an unpleasant surprise as far as the amount of debt they must carry as a result of the government’s efforts to help them through the pandemic crisis.
Let Us Help You Today
A Alabama business & corporate litigation lawyer can help you if circumstances have taken a turn for the worse since you received your PPP loan or other business loan. Contact Cloud Willis & Ellis for help with your case.