Hey SBA……Give Small Business a Break!
The Payroll Protection Program (“PPP”) administered through the SBA was a very good idea, intended to help keep open the doors of small businesses around the country. Unfortunately, it has turned into a nightmare for the smallest of small businesses. Those PPP recipients now interested in applying for forgiveness have had to initially wade through a cumbersome and confusing application process, forcing small business owners to expend countless hours on webinars and Zoom calls intended to provide clarity and guidance, but usually unable to provide any tangible solutions because the SBA kept changing the rules.
Even the recently-released streamlined Form 3508EZ forgiveness application—intended to make the forgiveness process easier—has confusing elements in it. For example, the form requires disclosure of the number of employees at the time of the forgiveness application. And since we have been told that the forgiveness application from banks will not even been available until mid-August for the earliest awardees and later for all others, the SBA is basing forgiveness on the state of a company well-past the initial 8-week the PPP funds were intended to cover. That doesn’t seem fair.
Further complicating the forgiveness process is that the banks that made the PPP loans have to approve the forgiveness applications before the SBA reviews them. Rumors are that the forgiveness process will overwhelm the banks just as the initial application process did. Some banks are rumored to be planning to bring in third-party companies to oversee the forgiveness review process. We will easily enter 2021 before most companies will know how much if any of the funds they have received will be forgiven.
And all along the way, the smallest of the small business will be burdened to comply with the ever-changing rules of the SBA, the need for complicated accounting and record-keeping, the expenditure of precious funds on consultants and the risk that their application will fall into some black hole, just like what happened during the initial application process.
Here is what I petition Steven Mnuchin, the Secretary of the Treasury, which oversees the SBA to do:
Give the smallest of the small businesses a real break and let them focus on running their companies and not in complying with the requirements of the forgiveness process. According to the SBA, through June 6, 2020, nearly 65% of the loans were $50,000 or less and represented just 10.6% of the total dollars provided. But that comprises more than 2.9 million small business who are barely squeaky by. Mr. Mnuchin can sign an order today that instructs the SBA to immediately forgive all loans of $50,000 or less, providing immeasurable benefits to millions of mom-and-pop businesses around the country. In addition, it would lighten the load on banks and the SBA on reviewing applications for 2.9 million small businesses, enabling them to concentrate on the larger-dollar grants.
If the government really wants to help small business recover from this crisis, then let us stop fretting over a complicated forgiveness process and allow us to get back to running our business.