This week marks the end of the 8-week forgiveness period for the first PPP loans issued. Those of you “lucky” enough to receive your PPP loans during the first few days they were issued are wondering what to do now. Those of you who received loans during the initial couple of weeks the loans were distributed will be wondering the same thing with your forgiveness periods ending in the near future. While the US Department of the Treasury and SBA have issued initial guidance on forgiveness and posted a loan forgiveness application, we see potential changes on the horizon. This program has been developed in concert with its execution from the start, creating questions and concerns about the ultimate end-game. With many of the issues making their way to our representatives in Washington D.C, we see movement in Congress to pass bills that will change the rules for the program and ultimately benefit borrowers.
Given the current movement in Washington related to the PPP and the momentum swing towards making the program more flexible to help borrowers achieve full forgiveness, our recommendations for clients are to not pursue forgiveness or repay loans quickly. There has been no guidance establishing a timeline or deadline for borrowers to apply for loan forgiveness. With the potential changing rules, we advise clients to wait to pursue forgiveness until we see what changes Congress might pass. Additionally, if your 8-week forgiveness period ends and you have loan money remaining that hasn’t been spent, we advise you to delay paying the money back at this time. The bills that the House and Senate have proposed may provide an opportunity for you to spend those additional dollars and receive forgiveness.
So what should you be doing now? You should continue to track the qualified payroll and nonpayroll expenses paid with the loan. We also still advise calculating your “forgiveness benchmarks” (we walk you through the process in this previous post). While we and others have developed forgiveness calculators and spreadsheets, we are holding off on sharing those until we understand what changes will be made. We don’t want to have clients work through a lot of calculations and spreadsheets just to see the rules change, requiring all of the work to be redone. Additionally, we have seen drafts of excel workbooks put together by the SBA that may ultimately need to be completed by borrowers when applying for forgiveness.
While we recognize clients are anxious to receive forgiveness for their loans, the current state of things makes us believe the best course at this point is to be patient and see what changes are made. Our team continues to monitor all changes and updates related to PPP and will do our best to keep you apprised. As always, we are here to help and support you.
If you need assistance with your loan tracking or you would like to discuss your situation relative to PPP loan forgiveness, we are here to help. Reach out to your WR Partner or you relationship manager. You can also email our COVID-19 task force for assistance: COVID19TASKFORCE@websterrogers.com.