Banks, SMBs Push For Simplified PPP Loan Forgiveness
The rules behind forgiveness for the PPP loans dictate that if an SMB used the money correctly, with 60 percent going toward payroll and 40 percent to other allowable expenses, the SMB won’t have to pay back the loan.
But advocates for SMBs are petitioning Congress to streamline the process. For instance, the Consumer Bankers Association reported that as many as 80 percent of forgiveness applications need follow-ups to help clear up errors or fill in missing information. And a report from the Government Accountability Office (GAO) found that “applying for loan forgiveness is more time consuming than applying for the PPP loan itself,” CNBC reported.
Meanwhile, the EZ form, purported to be a simplified version of the process, isn’t that easy either, according to CNBC. Trade groups have asked Congress for legislation to simplify the forgiveness process for loans under $150,000, which make up the majority.
Asked about the possibility of changing the process, Treasury Secretary Steven Mnuchin said there is bipartisan support to go beyond the EZ form, but businesses shouldn’t wait for new legislation to try to apply for forgiveness, CNBC reported.
The guidelines for forgiveness were released in May, but many SMBs found them to be cause for more confusion over things like when the period of covered expenses begins and how to calculate the number of employees for a company.
In June, the Consumer Bankers Association and Bank Policy Institute co-signed a letter asking Congress to automatically forgive loans under $150,000. That would cover roughly 85 percent of the PPP loans, but only 26 percent of the actual funding. The proposal specified that businesses would still have to verify that they used the money as intended, but lengthy forgiveness applications wouldn’t be needed.