The Paycheck Protection Small Business Forgiveness Act (PPSBFA, S.411), a bipartisan bill, was introduced to the Senate on June 30, 2020. The PPSBFA would provide automatic loan forgiveness to all PPP loans under $150,000.
Since the establishment of the program through July 14, 2020, 4.9 million loans and $517 billions have been provided to business owners. The SBA’s most recently issued demographic details reflect that 86.6% of PPP loans and 27.6% of PPP funds would qualify for automatic forgiveness should the PPSBFA become law.
The Paycheck Protection Program (PPP), a provision in the CARES Act signed into law by President Trump on March 27, 2020, provides forgivable loans for businesses impacted by the devastating financial impact of the epidemic.
The forgiveness component is what attracted massive interest in the program as business owners across the country were faced with government shut down orders and a significant decline in economic activity. The forgiveness application process and clear rules on what criteria were required to obtain full forgiveness were delayed. As information was released, borrowers and lenders were faced with confusion than clarity.
To address the concerns expressed by borrowers, stakeholders and lenders, Congress passed H.R. 7010 – The Paycheck Protection Program Flexibility Act of 2020 (PPPFA) and President Trump signed the legislation into law on June 5th, 2020. The PPPFA modified key provisions of the PPP including the maturity of PPP loans, deferrals of PPP payments, and the way forgiveness of the loans would be calculated.
A simplified version of the forgiveness application was released and the changes made the terms clear and significantly expanded the opportunity for flexibility in decision making that would not impair the opportunity for borrower forgiveness.
The PPSBFA, introduced on June 30, 2020, also includes modifications to the “Hold Harmless” provision of Section 1106 of the CARES Act and gives lenders greater protection from the constantly evolving rules and regulations of the program with regard to forgiveness eligibility and the extent to which lenders can be held responsible for the certifications, attestations and documents of the borrowers.
We are monitoring the progress of this and other legislation and will keep you updated as we learn new information.
Please reach out to cares@brinkersimpson.com with questions.
We are in this together,
Brinker Simpson & Company, LLC
Disclaimer: This alert is for informational purposes only and does not constitute professional advice. Information contained in this communication is not intended or written to be used as tax advice & cannot be used by the recipient to avoid penalties that may be imposed under the Internal Revenue Code. We strongly advise you to seek professional assistance with respect to your specific issue(s).