Small business owners who applied for the Paycheck Protection Program (PPP) have a chance to have the loan forgiven by filling out the recently released Loan Forgiveness Application.
Despite the new documentation, some business owners are in the dark about the process given the length of the application and stringent requirements.
For one, borrowers will be ineligible for forgiveness on unspent capital — but the timing for spending it is more flexible.
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Last week, the Small Business Administration (SBA) and the Treasury released the Loan Forgiveness Application for the Paycheck Protection Program (PPP). Small business owners across the country who received funding from the SBA through the PPP were anxiously awaiting this documentation to get confirmation on important details surrounding loan forgiveness, especially borrowers who were funded in the first weeks of the program back in early April.
The forgiveness application and its accompanying instructions came with quite a few unexpected developments for small business owners. The whole process is nothing less than a “ticking time bomb,” according to Parker Conrad, CEO of payroll provider Rippling.
“We had a tremendous amount of interest in the PPP loans, companies that were downloading the reports, that were applying for the PPP loans on Rippling,” Conrad told Business Insider. “They were told there was a way to get this loan forgiven, and we’ll get you some guidance later. And then the guidance comes out and says that in order to get the loan forgiven, you have to have already spent it, and I think a lot of people are saying that it’s just not fair.”
Uncertainty still surrounds PPP forgiveness following the release of documentation
Conrad said that due to the amount of uncertainty surrounding the process, many of his customers are uncomfortable spending their PPP funds without further and more specific guidance. Yet the application is clear that without having spent the capital, borrowers will be ineligible for forgiveness on at least a portion of the loan.
Additionally, the length of the forgiveness application is likely to be a stumbling block for many small business owners, in Conrad’s view.
“The application is like a tax return. It’s very long and complicated — it’s not like the 1040EZ, it’s like the 1040 long and hard,” Conrad said. “For us, we’re doing a lot of this for our clients, so it’s a business opportunity for us, but at one point this was presented as a very simple loan application, and now it’s become very complicated.”
Adding to that complication are a host of issues for which no answers exist as of yet. One example Conrad cites is the fact that the government expects borrowers to submit IRS Form 941, the Employer’s Quarterly Federal Tax Return, as part of the forgiveness application, which many businesses will not have in their hands due to timing issues.
“For most businesses, their 941 forms aren’t available until after …read more
Source:: Business Insider