PPP Forgiveness

Although the focus of this post is PPP forgiveness, the loan itself is a great deal. The payment terms are phenomenal, and it can be essential to helping people get back on their feet. So even if you have clients that don’t qualify for 100% forgiveness, the interest rate is phenomenal.

But loan forgiveness is really where it’s at, because that is free money!

Let’s talk about some exciting developments with two different kinds of loans: the EIDL (Economic Injury Disaster Loan) and the PPP. Regarding the EIDL, under the original bill each business was supposed to receive $10,000. Then the SBA instead decided to give out $1,000 per employee up to $10,000. However, the new bill does two things. First, it says you actually can get that extra advance now up to $10,000. (This is a return back to that original language.) Second, the advance is not going to reduce your PPP loan forgiveness, which it was going to under the CARES Act.

As an example, let’s say you have a business that received the $10,000 dollar grant from EIDL and then also got PPP. Your client can still qualify provided they have the right types of expenses and qualified spending on those expenses. They now qualify to get all of that forgiven despite the fact that they got the grant.

Another thing people are going to be happy about is the simplified forgiveness application for loans under $150,000. It is a much, much, easier process now to get your loan forgiven than it was under the Cares Act.

The application is only one-page long and you’re not responsible for providing proof anymore, which was a prior concern. They didn’t come out directly and say this time, but there’s likely a minimal audit risk for recipients of loans under $150,000, except in instances of fraud. If they suspect fraud, they may come sniffing around for some additional documentation.

One question remains: does the $150,000 limit apply to the total of both loans?  Or is it $150,000 per loan because the second tranche is actually considered to be a new loan? They’ll have to come out and clarify and they’ve given the SBA a very short window of time. My gut tells me that the limit will be on a per loan basis, but we’ll have to see.

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