Applying for Small Business PPP Loan Forgiveness

While the Paycheck Protection Flexibility Act significantly lowered the bar for small business recipients of PPP loans to qualify to have their loans forgiven, the process for applying for forgiveness remains both murky and fluid. On June 16th, the SBA updated the Paycheck Protection Plan Loan Forgiveness Application.

A problem, however, is that the calculation formulae included in the form and in the accompanying worksheet are work are abstruse – so much so that the SBA approved banks and credit unions that were tasked by the SBA to process and support the original PPP loan applications seem just as befuddled as the borrowers. Below is a message that an FPH client passed along from Central Pacific Bank just a few days ago (July 17th) –

"Important updates for PPP loan borrowers The Small Business Administration (SBA) has not issued final guidance regarding the Paycheck Protection Program (PPP). We will continue to provide you with updates via email and at https://www.cpb.bank/ppp-forgiveness regarding final forgiveness guidance and when the CPB online loan forgiveness portal will be available."

On the (VERY) bright side, Washington seems to have acknowledged the complexity issue, as Treasury Secretary Steve Mnuchin testified last week (Friday, July 17th) before the House Small Business Committee in favor of a proposal backed by thousands of U.S. Banks to automatically convert all PPP loans below $150,000 to grants.

This move would eliminate the need for these borrowers to complete the SBA forgiveness application. The initiative would cover 86% of the approximately 4.9 million PPP loans that have been issued so far. Since this proposal is not yet reality, the most definitive guidance, I can provide to PPP loan recipients is to STAY TUNED.

Separately, while the updated SBA PPP loan forgiveness application lists October 31, 2020 as the deadline for submitting form, as a practical matter, the Payroll Protection Flexibility Act’s extension of the deferment period to 10 months after the last day of he covered period as applicable to the borrower.

Additionally, small businesses that did not apply for PPP loans should be aware that funding is still available and that the deadline for applying for a PPP loan has been extended to August 8, 2020.

John H. Robinson is the founder of Financial Planning Hawaii and a co-founder of software maker, Nest Egg Guru.

DISCLOSURES: Securities offered through J.W. Cole Financial, Inc. (JWC) member FINRA/SIPC. Advisory services offered through Financial Planning Hawaii and J.W. Cole Advisors, Inc. (JWCA). Financial Planning Hawaii and JWC/JWCA are unaffiliated entities.

Fee-only financial planning services are provided through Financial Planning Hawaii, Inc, a separate Registered Investment Advisory firm. Financial Planning Hawaii does not take custody of client assets nor do its advisers take discretionary authority over client accounts.

The information contained herein is general in nature. Neither Financial Planning Hawaii nor J.W. Cole provides client-specific tax or legal advice. All readers should consult with their tax and/or legal advisors for such guidance in advance of making investment or financial planning decisions with tax or legal implications.

Securities offered through J.W. Cole Financial, Inc. (JWC) member FINRA/SIPC. Advisory services offered through Financial Planning Hawaii and J.W. Cole Advisors, Inc. (JWCA). Financial Planning Hawaii and JWC/JWCA are unaffiliated entities.

Fee-only financial planning services are provided through Financial Planning Hawaii, Inc, a separate Registered Investment Advisory firm. Financial Planning Hawaii does not take custody of client assets nor do its advisers take discretionary authority over client accounts.

The information contained herein is general in nature. Neither Financial Planning Hawaii nor J.W. Cole provides client-specific tax or legal advice. All readers should consult with their tax and/or legal advisors for such guidance in advance of making investment or financial planning decisions with tax or legal implications.