One of the most enticing features of the Paycheck Protection Program (PPP) loan is the thought of not having to pay it back. A small business with a PPP loan has just eight weeks to use it for qualifying expenses such as payroll, rent, mortgage interest and utilities. However, as small-business owners found out, the rules changed and qualifying for loan forgiveness became more complex. But if you received a PPP loan as provided under the CARES (Coronavirus Aid, Relief, and Economic Security) and have used the money appropriately you may not have to repay it.
It’s been circulating that the SBA and Treasury Secretary, Steven Mnuchin, are planning to make further changes to the PPP. This time focusing on criteria regarding forgiveness of the loans. These changes are expected to ease the requirements to further helping small biz owners. One of the biggest complaints from applicants of both the PPP loan program and the Economic Injury Disaster Loan (EIDL) program have been the constant regulation changes since the CARES Act passed. It’s important for business owners to monitor the regulations and be aware of changes, follow the rules and qualify for forgiveness.
If you need funding but haven’t applied for it, do so ASAP! There’s approximately $90 billion in funds remain as of May 6. Why so much? Well, that’s because loans in this second round were much lower than in the first. Plus, numerous corporations returned money they didn’t actually qualify for.
If you’re thinking of applying, financial experts say, small biz owners will likely have better luck getting approved if applying through a smaller, community bank – not through a larger national bank.
Finally, a good start for small business owners with questions about both obtaining the PPP and EIDL loans and how forgiveness works – look at the Treasury guidance issued May 5 and talk to your banker. It’s the best way to make sure you’re following loan guidelines and stay on the path to not having to repay it.