Less than 24 hours after the Paycheck Protection Program (PPP) shut down, Congress has given the mortgage program new life. On Tuesday night, the Senate permitted a invoice by unanimous consent that will maintain this system accepting functions till August eighth. Passing the invoice by unanimous consent allowed the Senate to put aside procedural guidelines to hurry up proceedings.
On Wednesday night, the House handed its extension, additionally unanimously. The measure will now go to President Trump for his signature.
Under this system, the SBA had permitted virtually four.9 million loans, totaling $520.6 billion. Despite this system’s recognition, it had roughly $130 billion in unallocated funds when it shut down. With a lot left in this system, some advisors query the purpose of offering an extension.
“I really don’t think there’s a lot of need for an extension,” mentioned Brian Streig, CPA and Tax Director at Calhoun, Thomson + Matza, LLP in Austin, TX. “It would be a better change to allow a second loan or have a different type of money.” He added, “my clients that need money now already got their PPP loan and spent it.” The incontrovertible fact that some locations might return beneath quarantine makes that situation extra urgent.
On the opposite hand, the extension might purchase time for enterprise house owners who had bother getting their data collectively beforehand. “We forget there are DIY taxpayers who were drastically impacted and didn’t have a relationship with an accountant or tax professional before Covid-19 hit,” mentioned Nayo Carter-Gray, Enrolled Agent and Owner of 1st Step Accounting in Baltimore, Maryland. “They had to find someone to help them apply, and by the time they did, accountants were already swamped and had to ‘fit them in.’”
The extension additionally exacerbates issues attributable to interactions with different mortgage packages. “Those that got the Economic Injury Disaster Loans (EDIL) first and plan to apply for PPP now have to ensure those funds aren’t used for the same purposes,” mentioned Nicole Davis, CPA and Principal at Butler-Davis, an accounting agency in Conyers, Georgia. Even with the extension, extra stimulus will possible be on the desk.
Automatic forgiveness on the desk as nicely
Last night time U.S. Senators Kevin Cramer (R-ND), Bob Menendez (D-NJ), Thom Tillis (R-NC) and Krysten Sinema (D-AZ), of the Senate Banking Committee launched The Paycheck Protection Small Business Forgiveness Act. Specifically, the ACT would forgive PPP loans of $150,000 or much less if the borrower submits a one-page attestation kind to the lender. It additionally ensures the lender will likely be held innocent from any enforcement motion if the borrower’s attestation contained falsehoods.
According to Senator Cramer, there are three.7 million PPP loans of $150,00 or much less, for 85 % of all PPP permitted loans. Yet these loans are solely 26 % of the PPP funds delivered. “The costs of applying for forgiveness of a PPP loan of this size is $2,000 for the small business and $500 for the lender,” he mentioned on his web site. He provides the laws may save small companies $7.four billion and banks almost $2B.
This can be a welcome change not just for small companies however tax professionals as nicely. “The PPP and EIDL programs sucked a lot of time and resources from my firm,” mentioned Eric Pierre, CPA and Principal of Pierre Accounting in San Diego, California. “We spent hours and hours helping clients and didn’t get paid because banks weren’t honoring the law.”
Adam Markowitz, Enrolled Agent and Vice President at Howard L. Markowitz PA, in Orlando Florida agrees: “The automatic forgiveness of PPP is something that everyone has been screaming about for months.” He added, “so long as they are still subjected to potential audits for fraud just like any other tax document would be, that’s good enough to push the program along and get this off the minds of Congress, the banks, small businesses and those who aided in preparation of these PPP forms.”