Small Business Administration announces plans to cancel nearly 70% of PPP loans
Millions of small businesses that received Paycheck Protection Program loans are waiting for answers on how and when their loans would be canceled. Now the Small Business Administration has announced a plan that would cancel almost 70% of all loans it has made.
“The new guidelines from the Treasury Department and the SBA are intended to make the process for applying for forgiveness of loans under $ 50,000 easier,” said Molly Day of the National Small Business Association.
The new directive cancels PPP loans of $ 50,000 or less, but also comes with a new rule. The rule allows businesses without employees, or businesses with the sole owner of the employee, to now have most or all of their loans canceled.
Initially, most of the repayable portion of a PPP loan was what was used to pay employees. The new rule also relaxes the review requirements for lenders to review small business documents proving how the money was spent.
“A lot of small businesses don’t have employees, or they have an employee and it’s themselves, the adjustment that really makes it a lot more convenient for sole proprietors who are small businesses. [and] do a great job and deserve help as well, ”Day said.
The Small Business Administration’s forgiveness process lacks the usual bureaucracy that accompanies most government forgiveness processes. Business owners who have received loans of $ 50,000 or less must complete a one-page document, just released by the SBA, and have it processed by their lender.
“I think making the forgiveness process easier and more streamlined could help a lot of small businesses,” Day added.
With loan debt hanging over their heads, many small businesses have been reluctant to take on additional debt or invest more of their savings in their business. Relieving them from the burden of loans could now allow them to do so and could save some businesses that were on the brink of collapse.
However, the SBA stresses that there are no guarantees and is still pushing for Congress to continue to support the next stimulus bill. In addition, he is pushing for the SBA to extend the new guidelines to loans of $ 150,000 or less.