Bank groups ask forgiveness for PPP loans
While this would cover about 85% of loans, it would only cover about 26% of PPP loan dollars, the two groups said.
Companies would still be required to verify that their P3 funds were used in the correct manner prescribed by the program, to keep employees on the payroll. But they wouldn’t have to fill out long pardon requests, saving them time and money. Both organizations said it would save business owners over $ 7 billion, which could be used for reopening and other such costs.
The PPP was passed by Congress in March as part of the Coronavirus Aid, Relief, and Economic Security Act (CARES), to provide loans to small and medium-sized enterprises (SMEs) affected by economic turmoil from the coronavirus. The letter from both organizations, however, indicates that the forgiveness aspect of the program has proven to be slow and tedious for businesses.
The letter is also accompanied by an independent analysis by research firm AQN Strategies, which concludes that the combined resources required to request a rebate under the current plan would be $ 2,000 to $ 4,000 per company for third-party expenses and other costs, as well as 20 to 100 hours of focused time, due to the length and complexity of the pardon application.
According to the letter, the smallest 60% of the loans were less than $ 19,000. The estimate payable for the current cancellation criteria would be around 10-20% of the loan itself and could be used instead to pay rent or utilities, the letter said.
“For small businesses that operate without full-time finance professionals, executives need to focus on running their business during these crises – not going through paperwork and reading complicated regulations in an effort to play the role of amateur accountant, ”the analysis reads.
The PPP came up against controversial due to the fact that many large listed companies ended up receiving large sums of money and the eight week period for companies to use the money was too short. Some have called for this period to be extended to 24 weeks.