The Small Business Administration (SBA) released an application and guidelines for businesses seeking forgiveness on loans they obtained as part of the Paycheck Protection Program (PPP).
SBA plans to release additional regulations and guidance to assist borrowers and lenders during the forgiveness application process, according to a release from the agency.
Businesses can access the current application and instructions online through SBA.
The forgiveness application process is an essential next step for Alabama small businesses and the state’s banking industry, which helped facilitate the loans.
“With the release of guidance on Paycheck Protection Program loan forgiveness, small business owners are one step closer to realizing the greatest benefit of the stimulus program designed to provide relief from the impact of the COVID-19 pandemic,” said Scott Latham, president and CEO of the Alabama Bankers Association, in a statement to Yellowhammer News. “Just as in the initial phase of PPP, Alabama banks stand ready to help small business owners through the forgiveness process and to further partner in working to reignite our state’s economy.”
The National Federation for Independent Business (NFIB) is holding a special webinar on Tuesday, May 20, to advise small businesses on the loan forgiveness process. Those interested in participating can register through the NFIB site.
The second round of PPP funding has brought more than $1.5 billion in relief to Alabama small businesses.
The #PaycheckProtectionProgram continues to assist many #smallbiz in #AL! As of May 8th, 30,647 loans amounting to $1,525,755,462 were approved for #Alabama during the 2nd round of #PPP funding. Proud @SBAgov & @USTreasury are still working hard to provide #COVID19 relief.
— Richard Shelby (@SenShelby) May 11, 2020
A report in the Wall Street Journal on Sunday noted that lawmakers expect to revise PPP to provide more flexibility in how the funds may be spent. Under the original terms, businesses are required to spend at least 75% of the loans on payroll. However, some businesses with higher overhead costs, such as restaurants and hair salons, have struggled to make PPP funding work for their operations.
It is also expected that changes will include extending the time to use the funding beyond the terms currently required by the program.
The form and instructions from SBA include several measures to reduce compliance burdens and simplify the process for borrowers, including:
Options for borrowers to calculate payroll costs using an “alternative payroll covered period” that aligns with borrowers’ regular payroll cycles.
Flexibility to include eligible payroll and non-payroll expenses paid or incurred during the eight-week period after receiving their PPP loan.
Step-by-step instructions on how to perform the calculations required by the CARES Act to confirm eligibility for loan forgiveness.
Borrower-friendly implementation of statutory exemptions from loan forgiveness reduction based on rehiring by June 30.
Addition of a new exemption from the loan forgiveness reduction for borrowers who have made a good-faith, written offer to rehire workers that was declined.
Tim Howe is an owner of Yellowhammer Multimedia
