If you have taken a loan in the Paycheck Protection Program, you will likely plan to file a forgiveness application to forgive the loan. The time period to file for forgiveness is allowable for 10 months after the end of your 24 week period. For most clients, this will be in late 2021. The amount of paperwork in filing the application may not only be burdensome on the small business but also on the banks that are processing the loan. It is estimated that the cost to the banking industry can be $500 million.
There is currently a bill presented in Congress, the Paycheck Protection Small Business Forgiveness Act, which is aimed at automatically forgiving all PPP loans of $150,000 and under.
There is also another proposal floating around to automatically forgiving all PPP loans of $50,000 and under. It seems to me that the one for $150,000 and under has more traction.
This entails signing a one page document instead of filing a full forgiveness application. The bill is supported by the banking and trade lobbies and receives bipartisan support. It is favored to pass with the next stimulus bill. While the current Congress is slow to act in passing a second stimulus bill this fall, it seems a bill likely to be enacted on at least by the time the new Congress comes into session in January 2021.
What does this mean for you? You may still choose for file sooner which means you will file the application in its current state with all the necessary paperwork and requirements. You may let us know if you would like us to assist you. You may also choose to wait and see if there will be any action in the first quarter of 2021 for an automatic forgiveness.