GRANITE STATE NEWS COLLABORATIVE

In May, most businesses that received loans under the federal Paycheck Protection Program were pleased with the cash infusion as they struggled with the loss of revenue from the Covid-19 pandemic, but their gratitude was tempered by the lack of clarity on obtaining loan forgiveness, as was proposed under the CARES Act approved by Congress.

Several months later, with rule changes and the PPP loan period extended, uncertainty remains. “I think it is fair to say certainty is lacking with respect to how the program is going to conclude,” said Bruce Berke, state director of the National Federation of Independent Business. “I know the money has to be spent in 2020. Hopefully, there will be more structure to the forgiveness process.”

The initial funding approved by Congress stated that forgiveness for a loan required 75% of the money be spent on payroll. The money had to be spent in the eight weeks after it was received and paid back in two years if it was not forgiven.

After an outcry from many businesses, the subsequent Paycheck Protection Program Flexibility Act of June 5 extended the period for using the money to 24 weeks or the end of the year, whichever is sooner, with 60% toward payroll, 40% toward other allowable expenses, such as rent, mortgage and utilities and a repayment period of up to five years for loans awarded after June 5 and two years before June 5. That has given lenders and borrowers more breathing room to prepare documents for forgiveness and for all of the rules to be finalized.

The U.S. Small Business Administration has not forgiven any loans but has received about 100,000 forgiveness applications, a small percentage of the roughly 5 million loans totaling $525 billion that were approved. Officials have promised to begin processing those applications, according to recent reports.

Kristy Merrill, president of the New Hampshire Bankers Association, said there is legislation now awaiting congressional approval to “streamline” the forgiveness process for loans of less than $150,000, which she said represent 86% of the loans approved in New Hampshire. But Merrill cautioned that given the political climate in Washington, the legislation may never get approved.

“It is seen as helpful to small businesses and would certainly make things easier to process,” Merrill said.

Some banks are holding off submitting forgiveness requests, hoping the paperwork is simplified through congressional approval, she said, adding that others are moving ahead because the borrowers don’t want to wait.

Borrowers have 10 months after the covered period of the loan to file for forgiveness.

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