This is our weekly report on the status of your PPP Loan forgiveness. We have SOME new news.
The SBA has notified lenders the agency will roll out, possibly as early as August 10, a portal available to us for the submission of PPP Loan forgiveness applications after those applications have gone through our review. We say “possibly” because there are still other changes likely to occur. Customers Bank will not begin accepting forgiveness applications until we have more guidance and other issues are addressed.
Policymakers in Washington, DC continue to debate what will come next with PPP and associated programs designed to help small business. Meanwhile, how exactly lenders are supposed to process loan forgiveness remains unsettled. And, still under consideration is blanket statutory forgiveness for most borrowers.
Added to the debate about forgiving all loans under a threshold level is US Senate legislation from Sen. Ben Cardin (D-MD) that enjoys strong support from Sen. Marco Rubio (R-FL) and Treasury Secretary Steven Mnuchin. The “Prioritized Paycheck Protection Program” (AKA P4) would reallocate unspent PPP loan funds of about $130 billion to firms with fewer than 100 employees that were “disproportionately harmed by the Covid-19 pandemic.” (Think hospitality, travel, and entertainment.) It is possible that firms which already have borrowed under the PPP could be eligible for a second loan under P4.
Separately, the Trump Administration has put tax cuts on the table as a potential economic stimulus tactic.
Traditionally, Congress takes a break for August albeit the need to deal with a pandemic in an election year might well motivate the members to keep working on Capitol Hill. Leaders from both sides of the aisle would like to resolve the economic recovery issues – PPP forgiveness, P4, increased funding for the SBA Economic Injury Disaster Loan (EIDL) program, lengthened unemployment compensation benefits, aid to states and local governments, and tax cuts – before going home. Following adoption of any new legislation, the SBA and US Treasury could rollout new rules and guidance for implementation.
We are hopeful that by our update to you on Tuesday, August 4, Customers Bank will be able to provide borrowers with specific plans for filing applications for loan forgiveness in the easiest and least burdensome manner. Until then, we are all anxiously awaiting Congressional Action.
What can you do while waiting?
Well, if you have not expended all of your PPP Loan funds, consider taking the 24-week covered period and using all or most of it for payroll including health care benefits and employer-paid taxes. While the last guidance requires employers to use only 60% on payroll-related expenses to be eligible for forgiveness, you can spend more and even all of your PPP Loan this way. And, if you spend all of your PPP Loan funds on payroll, complete forgiveness is likely. Remember the limit, however, is $46,154 per employee. There are separate payroll limitations for owners.
We will give you additional information next Tuesday. You can learn more at our Paycheck Protection Plan resource page. If you have any questions, or immediate needs, please call or email me anytime.