Home Furnishings Association members who borrowed $50,000 or less through the Paycheck Protection Program (PPP) received good news last week. The Small Business Administration has granted easier loan forgiveness.
Those small borrowers won’t be penalized if they reduced the number of employees or trimmed payroll.
HFA has asked for more. The association is lobbying for passage of the Paycheck Protection Program Small Business Forgiveness Act, which would grant automatic forgiveness of all PPP loans of $150,000 or less. House and Senate versions of the bill have drawn strong bipartisan support but have not been allowed votes.
It makes sense to forgive these smaller loans and eliminate the time-consuming paperwork required by the forgiveness application process. Doing so would help small businesses and lenders. It would also free resources for banks and the SBA to focus attention on larger loans.
SBA wants to grant more flexibility
That is the logic behind the recent ruling by SBA and the U.S. Department of the Treasury.
“The Administrator and the Secretary believe that the additional exemptions … are consistent with the purposes of the CARES Act, including to provide much-needed financial assistance to a broad range of small businesses, and provide borrowers appropriate flexibility in the current economic climate,” the SBA notice said. “The Administrator and the Secretary have determined that these exemptions are de minimis.”
The notice explained that the 3.57 million outstanding PPP loans of $50,000 or less totaled just $62 billion of the $525 billion in PPP funds. Many of those small borrowers reported having no employees other than the owner or only one.
The simpler, two-page PPP loan forgiveness application form for borrowers of $50,000 or less is here. Instructions are here.
Check with your lender for further clarity
Julie Isley, owner of Boone’s Furniture & Gifts in Burlington, N.C., is taking the smart approach to the latest news. Boone’s PPP loan was less than $50,000, she said, and she will contact her lender to make sure she completely understands what the rule change means for her business.
“We feel like we’ve done the right thing, but we’ll call our banker,” she said.
Other HFA members who borrowed $50,000 or less through the PPP should do the same to make sure they are granted maximum loan forgiveness for which they qualify.
Not a member of the HFA? Let us know you’re interested in adding your voice to ours.