Small business owners who have taken a Paycheck Protection Program loan with the expectation that it will be forgiven may be in for a big surprise. That’s because the rules for the program are complicated, and not etched in stone.
The New York Times reports that business owners and some lawmakers are urging the Treasury Department to make the requirements for loan forgiveness easier to meet. A major issue seems to be the number of large companies that have drawn from the limited funding pool. Treasury Secretary Mnuchin has said the department will look closely at any company which took more than $2 million from the program, and hold companies that do not meet the program’s terms “criminally liable”.
The Consumer Bankers Association said last week that loan forgiveness is “the next shoe to drop”, and that struggling businesses have been misled about loan forgiveness. There are a lot of boxes that have to be checked before a business can convert the loan to a grant, according to the Independent Community Bankers of America.
Paul Merski, a lobbyist for the ICBA told the paper that the forgiveness phase of the PPP program could be “10 times as complex” as the process for getting the loan.
Additional relief measures are in the works in Washington, and some Senators are suggesting that the rules be changed again to allow business to use only 50 percent of any loan money for payroll, with the rest available for other expenses. That could mean the difference between staying open or closing their doors, costing more people their jobs.