Applying for PPP loan forgiveness – is it time?

 

Applying for PPP loan forgiveness – is it time?

This is a question we are receiving almost daily and the answer is, “it depends.”

When you apply for PPP loan forgiveness, your bank has up to 60 days to review and approve your forgiveness.  Then they send it to the SBA.  The SBA has up to 90 days to review and approve your forgiveness and make the final determination.  Combined, this is potentially a 5 month process (assuming no delays with the SBA, which is not necessarily a safe assumption).

Over the last several months, Congress has been on and off in negotiations to pass another COVID relief bill.  In those negotiations, there has been some bipartisan support for including new legislation that would provide automatic forgiveness for all PPP loans under $150,000.

If this legislation is passed, it will likely make the paperwork requirements simpler and potentially the approval process faster. There are no guarantees of this legislation being enacted, nor a guarantee that it will speed up the approval process, but these changes still seem reasonably possible.

As a result, many PPP loan recipients are waiting to apply for loan forgiveness in case an easier, faster way is introduced, while others prefer to apply now.

If your PPP loan is over $150,000 and you have used all of the funds, then yes, go ahead and start your PPP loan forgiveness application. There has been no discussion of a simpler, faster process for these loans.

If your PPP loan is under $50,000 and you were taxed as a sole proprietor with no employees at the time of receiving the loan, then there is a very simple application available for you that requires very little back up documentation. I do not expect that a simpler form will be introduced for these loans, however there is still a possibility that a faster approval process could result from new legislation.

If your PPP loan is under $50,000 and you had employees at the time of receiving the loan, then there is a very simple forgiveness application available for you, but it does require full back up documentation including bank statements, payroll tax returns, proof of eligible payments, lease agreement, and utility bills.  If new legislation is passed, these documentation requirements may be simplified, and the approval process may be faster.

If your PPP loan is between $50,000 and $150,000, your loan is the most likely to benefit from potential new legislation as there is no simplified application at this time, and full back up documentation is required, including bank statements, payroll tax returns, proof of eligible payments, lease agreement, and utility bills. New legislation could simplify and speed up the loan forgiveness process.

Ultimately, this is an individual choice. If your bank is accepting loan forgiveness applications, you can use the existing forms & procedures to submit your application now.  If you prefer to wait for possible new legislation that might make the process easier & faster, this legislation is most likely to be passed either in December or soon after January 20th.