PPP Loan Developments: Only $120 Billion Left, Favorable Forgiveness Guidance from SBA and IRS Tax Pitfall

From my article on Entrepreneur.com 

The SBA Paycheck Protection Program (PPP) is the most significant small- relief effort in modern history. A key component of the $600 billion-plus (and counting) stimulus rollout is that beneficiaries can have their loans forgiven so long as they use the funds for qualifying expenses, which can include , rent, mortgage interest and utility payments.

The program was extremely popular in round one, and the initial $350 billion in  was claimed in only 13 days. The SBA began approving an additional $310 billion from the second round on April 27, but as of May 10, only $120 billion in funding remained. (A good chunk of which is owed to dozens of publicly traded companies having returned multi-million-dollar loans.)

PPP Forgivable Loans Will be Unforgiving for Many

From my article on Entrepreneur.com

Many small business owners who have been approved for Paycheck Protection Program loans (“PPP”) are realizing that the loan isn’t as forgivable as they’d hoped.

The amount a small business can qualify to have forgiven must primarily be payroll costs. The SBA’s rulemaking has stated that at least 75% of the forgiveness request must be payroll costs but can also contain up to 25% of other approved expenses under the law such as rent, mortgage interest and utilities. That rule seems to be widely understood and so long as small business owners are spending 75% of their PPP funds on payroll this rule won’t frustrate small business owners when it comes time to forgiveness.

For details on the PPP loan program in general, please refer to my prior article here.

PPP Is Back With $310 Billion in Additional Funding, But Small-Business Owners Must Act Fast

From my article on Entrepreneur 

On Tuesday, the Senate approved an additional $310B of funding for the popular Paycheck Protection Program (PPP) loans for small-business owners, and the House is expected to approve the measure as soon as today.

The original bill passed passed on March 27 and established $349 billion in funding for PPP loans, but that money evaporated in just two weeks. Consequently, many business owners were left unfunded or were unable to find a bank that would even take their application. This additional $310 billion will go much more quickly than the first round, as the pipeline is full of those who applied and missed out initially, as well as others who have since located a bank willing to take their application.

$205 Billion of the $350 Billion Appropriated for PPP Loans Has Been Claimed

From my article on Entrepreneur.

The American Bankers Association reported on April 12 that $205 billion of the $350 billion appropriated for Paycheck Protection Program (PPP) loans has been claimed. This number presumably represents applications that banks have processed and that have been approved through the Small Business Association (SBA). Keep in mind, approval by the SBA occurs before the loans are actually documented and funded.

While some small-business owners have received their PPP funds, the vast majority are still looking for a bank or are somewhere in their bank’s application or funding process. Frustrations are running high amongst small-business owners, but there is hope that the funding of these loans will increase significantly over the next week, as banks who started taking applications early are now moving on to the loan document and funding process. (For an overview of the PPP loan and how it can be forgiven, please refer to my prior article here.)

How to Submit Your SBA PPP Loan Application and Calculate the Loan Amount

From my article on Entrepreneur.

Many small-business owners are completing their Paycheck Protection Program (PPP) loan applications and are running into common questions and roadblocks. The immediate question right now revolves around two issues: First, how do I work with my bank or find a bank to get it submitted? And second, how do I properly calculate the loan amount on the application? Read the article on Entrepreneur here.