The SBA announced that they would be accepting loan forgiveness applications on August 10th, creating many questions on what to do next. However, most banks have been quick to delay the process of accepting these applications because there are many changes that could occur if the HEALS Act finally gets passed by the Senate.
The new legislation is expected to provide more flexible covered periods, additional forgivable expenses, and potentially no documentation requirements for loans under $150k, so the strategy today is to hold tight, and not worry about juggling the complex application process, and wait for the evolving set of rules to finalize.
There are currently 3.7mm PPP loans outstanding that were less than $150k each (accounting for over 85% of the outstanding loans) but the dollar amount from these applications only accounted for ~20% of the total PPP $$ outstanding- from an administrative standpoint, it makes sense to pass a blanket forgiveness for these loans so the SBA can focus on the larger companies that took most of the loans. We’ll see if the Senate feels the same, but there is plenty of time to submit an application (you have up to 10 months after the covered period ends) and we have up to the end of the year to satisfy the FTE covenants, so the plan is to wait and see…
The Senate is back in session on September 7th so we hope to learn more soon. Perhaps there will be additional stimulus programs as well, with the economy clearly not back on its feet just yet. Will keep you posted as events evolve!