Should You Wait to Apply for PPP Forgiveness?

The Paycheck Protection Program is top of mind for many small businesses, CPAs, and lenders. Understandably, many loan recipients are chomping at the bit to begin the forgiveness process and have some certainty regarding their payback amount. While the eagerness to get the PPP forgiveness process started is not unfounded, experts are advising against getting in a rush to apply. There are many reasons waiting might be the best option.

1. There are Still So Many Unanswered Questions

The Small Business Administration (SBA) and Treasury have still not released final guidance on the loans or forgiveness. While they are to release an FAQ with 25-30 questions, it is believed that the SBA and Treasury are waiting until the newest relief package is signed by President Trump before doing so. The legislation is expected to be finalized before Congress’ August 8^th recess.¹

2. Awaiting Changes

Perhaps the biggest reason to delay is that Congress is working on a new COVID-19 relief bill, which many are expecting to include another round of PPP for small businesses that meet more specific qualifications.¹ With so many changes to the program and processes already, many are waiting to apply for forgiveness until everything is more finalized, which could potentially come with financial advantages for the borrower.

3. Waiting Could Make Things Easier

For similar reasons to those mentioned above, many financial institutions are waiting to finalize their technological processes for managing the forgiveness of their PPP loans. Naturally, lenders and those creating the tools and software for the banks are also waiting for guidance from the SBA to ensure the process covers all bases. Similarly, “many payroll processors are preparing specifically-designed reports which borrowers will be able to use to support their loan forgiveness applications,” says Rigby Financial Group.²

4. The Deadline

Borrowers are not required to make any payments on their PPP loan until either they apply for loan forgiveness or 10 months have passed since the end of their covered period, so borrowers have plenty of time to ensure they have everything in order to maximize the funds. Joe Ehrhardt, CEO and Founder of Teslar Software warns, based on his initial interpretation of the IFR, “Once forgiveness has been determined, interest and fees can start being applied. So, as a borrower, if you don’t think your loan will be 100% forgiven, it would be to your detriment to apply for forgiveness early, especially if cash flows are tight.”

About Teslar PPP Forgiveness 

If you are a community financial institution who, like many others, have not yet finalized your forgiveness processes, Teslar would love to help! Our solution, Teslar PPP Forgiveness, is being provided at a low per-application cost to make the service readily available without long-term contracts or obligations.

Some key features of our low-cost solution include:

• Ability to communicate with all borrowers at once or individually
• Flexible template to house customer information
• Integrated with DocuSign® so bankers can securely send documents for e-signatures
• Forgiveness calculator
• Ability to adjust to inevitable changes during the SBA Forgiveness process 

If you think our Forgiveness solution might be a good fit at your community financial institution, don’t hesitate to schedule a demo below or email us with any questions at sales@teslarsoftware.com.

Sources:

1. Journal of Accountancy
2. Rigby Financial Group News