September 29, 2020
Dear WZ Clients, Business Associates and Friends,
More than five million small to medium-sized businesses have received, to date, $525 billion from the Paycheck Protection Program (PPP). The Small Business Administration (SBA) program promised loan forgiveness as long as a specific percentage of the funds were used toward payroll and to other allowable expenses. To date, not there has yet to be a single loan forgiven.
Lenders efforts to forgive the loans is faced with delays and complications that could leave employers on the hook for the money. Banks blamed the SBA and the U.S. Department of the Treasury for a lack of communication on how to proceed.
While PPP has been a lifesaver for many businesses, some are worried about the debt forgiveness. The rules behind forgiveness for the PPP loans dictate that if an SMB used the money correctly, that SMB won’t have to pay back the loan.
Financial institutions have been submitting applications for loan forgiveness since early August 2020, but haven’t received a response. Banks are also frustrated because they loaned their own money with the expectation that it would be repaid by the government, but they haven’t received a cent.
The SBA acknowledged it has received 96,000 forgiveness applications, about 2% of the total loans, but none have been approved or denied. Last week, SMBs were also reporting difficulty with the forgiveness aspect of the PPP.
We will continue to keep you apprised of the situation.
AS ALWAYS, WAGNER & ZWERMAN IS HERE TO ANSWER ALL OF YOUR QUESTIONS AND CONCERNS. WE ARE ALL IN THIS TOGETHER.
STAY SAFE AND HEALTHY
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