Thursday, 06 August 2020 17:24

PPP Forgiveness: No Need to Rush, and Other Tips

Written by Jeff Drew and Ken Tysiak, Journal of Accountancy


Although forgiveness for Paycheck Protection Program (PPP) loans is a foremost topic on the minds of borrowers and the CPAs who advise them, experts are saying borrowers should not rush to apply for forgiveness.

Long-expected FAQs expected to clarify many PPP-related issues are still awaited from the U.S. Small Business Administration (SBA) and Treasury. In addition, the loan forgiveness application has not been updated to reflect the recent five-week extension of the program’s deadline to Aug. 8.


A big reason for these delays is that Congress is debating a new round of COVID-19 relief, which is expected to include a second PPP initiative more targeted than the first one, said Mark Peterson, the executive vice president who heads the AICPA’s advocacy team in Washington, D.C.


Those discussions also may include major changes relaxing the forgiveness requirements for the smallest loans, possibly those up to $100,000 or $150,000.


“The situation is very dynamic,” Peterson said July 23 during the AICPA’s weekly Town Hall covering PPP and other issues related to the COVID-19 recession and recovery efforts.


Erik Asgeirsson, CEO of CPA.com, the technology and business subsidiary of the AICPA, said during the Town Hall the SBA and Treasury are not expected to release the expected 25 to 30 FAQs before President Donald Trump signs new relief legislation. Congress is trying to hammer out a package before going on recess Aug. 8.


Even if the FAQs do come out, the SBA issued a procedural notice July 23 that indicated it would not begin accepting PPP forgiveness submissions from lenders until a new software-as-a-service platform currently under development goes live Aug. 10. The SBA said the launch could be delayed if new legislation changes the forgiveness process in ways that require changes to the new platform.


The SBA’s notice adds another reason for waiting to work on PPP loan forgiveness applications to those covered in an AICPA blog post that published July 14, said Mark Koziel, CPA, CGMA, AIPCA’s executive vice president of public practice.


“We have to be as patient as possible,” he said.


The real PPP forgiveness deadline


Kari Hipsak, CPA, CGMA, an association senior manager, said in an interview the important deadline in the PPP forgiveness process doesn’t come until 10 months after the end of the loan’s covered period.


At that point, if forgiveness forms have not been submitted, the funds officially become a loan that needs to be repaid. Hipsak said it’s best for borrowers to take their time and make sure they have as much information as possible so they can maximize loan forgiveness.


“There’s no need to rush through the forgiveness,” she said. “A lot of businesses, I think, want to put the forgiveness behind them, but there are still a lot of unanswered questions. And so as long as there’s not a deadline to have this application submitted, other than 10 months after the end of the covered period, it’s really a business decision.”

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