PPP Loan Forgiveness was supposed to be in full swing by now except the SBA has yet to process any applications (https://www.washingtonpost.com/business/2020/10/01/ppp-sba-loans/).
Over four million loans were given and processing the forgiveness of those loans could take a long time. Just as an example, if all the loan forgiveness had to be processed in three months the SBA would have to forgive almost 64,000 loans per business day. This is the reason so many bankers are hoping that Congress passes an expedited “all loans below x are automatically forgiven” law. Many are talking about “x” being $150,000. Considering the current environment, we can’t expect a law like that to be passed before the election.
You have to apply for forgiveness within 10 months of the expiration of your covered period. To learn more about your covered period please follow this link. (https://www.journalofaccountancy.com/news/2020/oct/ppp-loan-repayments-deferral-period.html)
Which brings us to your first payment on your PPP loan. In my case my first payment is November. Even if I take the time to apply for forgiveness on my tiny loan (which might turn out to be wasted time right after the election) it will NOT be processed in time to avoid having a payment due. If I don’t take action I will be in default. I hate default. So I am going to check with my banker and make sure my banker has already done an automatic extension on my first payment.
A banker I just talked with said he has automatically extended all his customer’s PPP loans for 10 months because of the problems with the SBA not yet processing forgiveness. Your banker might have already fixed this potential problem. Please check with your banker on your first payment. Don’t allow your loan to go into default. Default = Bad.
There’s more about pandemic assistance and other timely business topics elsewhere in my blog. Or give me a call and we can discuss your particular situation.