Back in March, President Trump signed the Coronavirus Aid, Relief, and Economic Securities (CARES) Act.  This $2.3 trillion relief package was designed to help Americans get through this pandemic.  Under the Act, a new loan program was created called the PPP.  The idea was to put $600 billion into the hands small businesses so they could keep employees on the payroll. 

One of the biggest incentives for small businesses was that the PPP loans were going to be forgiven if certain standards were met. Essentially if the borrower used the funds to pay payroll, mortgage interest, rent and utilities over the eight weeks following receipt.  That standard was changed to be over 24 weeks!

In May, it became evident that barriers to achieving full employment was going to put the forgiveness in doubt.  Congress responded with the Paycheck Protection Program Flexibility Act which changed the CARES act to address these barriers.

Congress continues to tinker with the law confusing many business owners.  Borrowers are looking for fewer changes and more clarity.   The problem is in poorly defined terms, continuously changes requirements and calculations are exceptionally complicated in the forgiveness process.  Buyer’s remorse is growing.

The small business owners who have taken these loans do not want more changes; they want a simple process to forgiveness.  They got into the program to benefit their employees,   keep the business afloat.  What they did not want was to incur more debt.  An old adage that is applicable is “When you find yourself in a hole, stop digging!”  Business owners understand this better than most.  They lose sleep over debt.

Recently, some borrowers got some good news from the Small Business Administration (SBA)  The SBA just released a streamline forgiveness application.  Form 3508S is designed specifically for those who borrowed less than $50,000.  Businesses in this class are among the hardest hit.  Razor thin margins are being stretched even farther.  This new form does not make forgiveness automatic.

The good news for these small business owners will not have to reduce the amount eligible for forgiveness either of the following reasons:

  1. Reducing the salary or hourly wage of an employee during the covered period relative to first quarter 2020.


  • Reducing full-time equivalent employees (FTEs) during the covered period relative to a base period.

This change does not match the initial intent of the program but recognizes the reality of small business.  Now the small business owner must still do the math required in the Act, but they don’t have to show their work. 

For those who break the $50,000 loan ceiling, the old rules still apply, and that discussion is for another day.  It is a very complicated process and we are available to help with that process for those who are need help with this very complicated procedure.