<ol><li>Derailment of small business rescue clouds U.S. recovery <font color="#6f6f6f">POLITICO</font></li><li>Small Business Administration has opened its Paycheck Protection Program forgiveness portal. Here’s why many <font color="#6f6f6f">MassLive.com</font></li><li>The PPP Has Expired: Here’s What Small Businesses Can Expect In The Second Stimulus <font color="#6f6f6f">Forbes</font></li><li>DeKalb County establishes $15 million loan program for small businesses affected by COVID-19 <font color="#6f6f6f">Decaturish.com</font></li><li><strong>View Full Coverage on Google News</strong></li></ol>
The Paycheck Protection Program, which has kept millions of small businesses afloat during the pandemic, is in limbo, creating a new source of uncertainty for the country’s economic recovery.
The collapse of pandemic relief negotiations has brought complications for the massive emergency lending program, which shut down on Saturday to new loans after doling out more than $520 billion in funds, leaving banks and borrowers unsure of how to proceed with a key phase of the rescue.
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Scratch, a loan-servicing firm, said when it recently made applications available to an initial pool of borrowers that close to one-third of them completed the forms within the first week.
“If they want to be free and clear of how they might need to adjust their business operations, it would be better to apply for forgiveness when it’s available,” said Wade with the small business association.
The banks taking more time include some of the nation’s largest — JPMorgan Chase, Bank of America, Wells Fargo, U.S. Bank and PNC.
U.S. Bank spokesperson Greg Vadala said the lender expects that many small businesses will wait to apply, “allowing time for additional SBA guidance and potential moves by Congress to streamline the forgiveness process.” The bank is testing its systems and processes with a small number of customers.
“Some legislative proposals currently under review would significantly affect the review of applications, including those of loans under $150,000, which reflects over 93 percent of our PPP lending to date,” said Wells Fargo spokesperson Manuel Venegas. “We know that customers have seen many shifts and challenges throughout the PPP process, and we want to ensure we maintain our commitment to helping as many small businesses as possible with this process.”
The congressional gridlock is just one factor causing banks to take a wait-and-see approach.
In addition to seeking more guidance from the SBA, banks say they also want time to test the agency’s systems for handling the applications. Technology glitches plagued the program when an unprecedented number of businesses applied for aid through the agency after the loans became available in April.
“Based on the correspondence we have received from SBA, it seems they may not be quite ready to process without delays, questions or kinks,” Blankenship said. “Frankly, we did not want some of our best customers to be the beta test subjects, which as a result of the bad experience with SBA processing could reflect negatively on their experience with our bank.”
JPMorgan Chase is holding off until late August or early September to begin accepting forgiveness applications. Spokesperson Patricia Wexler pointed to a “complicated integration” with the SBA’s interface and said that the bank was actively building and testing its digital application now that it has specifications from the agency.
While JPMorgan supports automatic forgiveness for loans less than $150,000, “We’re not waiting for the legislation because we know our customers want to get started applying for forgiveness as soon as possible,” she said.
The American Institute of CPAs is encouraging thousands of accounting firms across the country to hold off before submitting their clients’ forgiveness applications. Beyond the uncertainty over streamlining the applications, legislation is pending that would allow businesses to deduct expenses associated with the loans from their tax returns. Business groups also say the SBA needs to provide more clarity on when employers can let workers go without sacrificing loan forgiveness.
Paycheck Protection Program borrowers have 10 months to submit applications after the 24 weeks they have to use the money and still qualify for maximum loan forgiveness.
“Wait for the potential simplified forgiveness application,” said Erik Asgeirsson, president and CEO of the accounting association’s technology subsidiary CPA.com. “Wait for the final guidance.”