Small-Business Loans Will be Forgiven, but Don’t Ask How

“We’re super nervous about the fact that we don’t know what’s going to happen,” she said. And the loan was only a temporary salve: With her revenue still down at least 30 percent, Ms. Kujala is preparing to lay off one of her employees.

A U.S. Bank spokesman said the bank was sending out invitations in stages to its forgiveness portal. After the bank was contacted for this article, a representative told Ms. Kujala that she would get an invitation soon.

Most borrowers — and their lenders — can afford to wait before seeking loan forgiveness. The CARES Act, which created the P.P.P., initially set repayments on any remaining debt to begin six months after a loan was disbursed, but Congress later revised the law to give borrowers as long as 16 months to apply for forgiveness. For most borrowers, that means the issue won’t become urgent until mid-2021.

But there, too, the law has a gray area. More than four million borrowers — a majority — have loans that were made before the rules changed. To scrupulously follow the law, lenders would need to formally modify those loans and get each borrower’s signature on the changes. That’s a “momentous task,” said Brad Bolton, the chief executive of Community Spirit Bank in Red Bay, Ala. The S.B.A. has not yet responded to banks’ requests for clarification on the matter — and payments for the program’s earliest borrowers are scheduled to come due this month.

Most lenders, especially the biggest ones, have decided to take the risk and simply postpone all payments, said Tony Wilkinson, the chief executive of the National Association of Government Guaranteed Lenders, a trade group. “Because it’s a benefit to the borrower, they’re doing it unilaterally, because who is going to object?” he said.

Glenn Sandler, an accountant in Melbourne, Fla., has around 200 clients with P.P.P. loans, averaging around $40,000 each. He’s advising all of them to sit tight and wait for what he believes will be legislative fixes to the forgiveness process. “Hopefully, Congress will get off their butts,” he said.

Mr. Sandler thinks automatic forgiveness for small loans is likely, in part because the alternative — trying to collect payments from small businesses struggling to stay afloat — is untenable.

“They’re broke,” he said of the mom-and-pop ventures that he works with. “There’s a lot of people who won’t be able to pay it back. So, what, they’re going to go into collections with them? There’s no sense in that.”

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