PPP Loan Forgiveness 

The following information is being shared simply to inform you that you have
options before immediately applying for PPP loan forgiveness. 

It is not a recommendation of your best, worst, or only course of action.

Before taking any steps toward PPP loan forgiveness you are advised to gather
as much accurate and true information as possible.  You are also advised to speak
with your tax advisor and/or banking professionals.   

With all that said...

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This week, the Small Business Administration started allowing PPP loan recipients to apply to have that debt forgiven. But you may want to hold off on taking that step.

Why it might pay to sit tight

The rules surrounding PPP loan forgiveness have continued to evolve since the program was first rolled out. Initially, businesses needed to spend 75% of their loan proceeds on payroll to qualify for forgiveness, but that threshold was later lowered to 60%. Small businesses have also been given more time to use up their loan funds since the program began.

Other provisions relating to forgiveness may be subject to change, as well. For example, it only recently became clear that employer payments toward vision and dental benefits are considered to fall under the payroll-costs umbrella. In the coming weeks, there's a good chance more clarity will emerge, which is why small-business owners shouldn't necessarily rush to apply for loan forgiveness just yet.

There's also been (unofficial) talk of forgiving all PPP loans that fall below a certain dollar threshold. Businesses that received modest loans, therefore, may not need to go through the process of applying for forgiveness at all.

While all PPP loan recipients are no doubt eager to see those debts forgiven, the reality is that PPP loans come with extremely affordable borrowing terms. Loans issued before June 5 need to be repaid in two years at 1% interest. Those issued after June 5 can be repaid in five years at 1% interest. When it comes to borrowing, it really doesn't get cheaper than that, so businesses that don't manage to get their PPP loans fully or even partially forgiven may not necessarily be out of luck.

There's also talk of a second round of PPP funding for hard-hit businesses. That second round has not yet been set in stone, but lawmakers have acknowledged the need for additional small-business aid in the course of their stimulus deal negotiations.


Better Bennington Corporation
215 South Street
Beautiful Bennington, Vermont 05201
802.442.5758
admin@betterbennington.com

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