The Consumer Bankers Association and Bank Policy Institute, in a co-signed letter, have called on Congress to automatically forgive Paycheck Protection Program (PPP) loans under $150,000.
Although that will cover around 85 % of the loans, it would only cover about 26 percent of PPP loan dollars, the 2 groups said.
Businesses would be necessary to verify that their PPP funds were used in the right ways the program mandated, to help keep employees on the payroll. But they will not have to complete lengthy forgiveness applications, which may save them money and time. The 2 organizations said it would spend less than $7 billion for business owners, that could be utilized for reopening along with other such costs.
The PPP was passed by Congress in March as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, to give out loans to small and medium-sized businesses (SMBs) impacted by the economic strife of the coronavirus. The letter from the two organizations says the forgiveness part of the program had proven slow and burdensome for businesses, though.
The letter also comes with an independent analysis done by research firm AQN Strategies, which finds the combined resources required to apply for forgiveness underneath the current plan would add up to $2,000 to $4,000 per business for third-party expenses and other costs, alongside 20 to 100 hours of focused time, because of the length and complexity of the forgiveness application.
The smallest 60 % of loans, the letter says, were for under $19,000. The estimate to pay for the current forgiveness criteria could be around 10 to 20 percent from the loan itself and is used instead to pay for rent or utilities, the letter says.
\”For small enterprises who function without full-time finance professionals, leaders have to be centered on managing their businesses through these crises – not coping with paperwork and reading complicated regulations in an attempt to play amateur accountant,\” the analysis reads.
The PPP has run afoul of controversy due to the fact that lots of large, publicly traded businesses ended up getting large sums of the money, which the eight-week period for businesses to make use of the money was too short. Some have required that period to be stretched to 24 weeks.
