But negotiations continued just as the Small Business Administration began accepting requests for companies to repay the loans this week. Now many lenders are waiting to see if a deal can be canceled before they start the process. The downturn raises more doubts for small business owners as they try to navigate the program and prevent them from repaying loans they expected to be forgiven.
“It’s frustrating to know about the benefit this can have for many small business owners who are waiting for apology,” said Holly Wade, director of research and policy analysis at the National Federation of Independent Business, who advocates for small businesses in Washington.
The confusion is the latest example of lenders and lenders being left in the dark about how to proceed with the Paycheck Protection Program, after suffering a chaotic launch dogged by incomplete leadership of the Trump administration and SBA technology glitches.
“While some of our members are currently applying for forgiveness, many are awaiting congressional action to simplify the forgiveness process,” said Consison Bankers Association spokeswoman Allison Heimberg.
The delay is highly confusing for small businesses, as the renewal of the paycheck protection program is one of the least controversial components of economic relief legislation that lawmakers are considering.
While congressional leaders and Trump administration officials have been benevolent on unemployment insurance and state aid, Democrats have signaled support for a plan proposed by Senate Small Business Chairman Marco Rubio (R-Fla.) That the PPP re-elect would start, companies could allow for second loans and reduce paperwork requirements for loan forgiveness applications. Simplicity of the forgiveness process is a top priority for banking industry lobbyists in economic relief negotiations.
Now banks are trying to decide how quickly they should start accepting loan lending applications from millions of lenders. Some banks are discouraging clients from speeding up their applications, although the SBA on Monday began accepting lenders.
“We encourage our customers to wait for any possible congressional action that could streamline the forgiveness process,” said Bank of the West Vice President Cynthia Blankenship.
The ability to apply for loan forgiveness is critical for companies seeking to plan and operate through the pandemic. Because the loans were intended to prevent redundancies, employers are bound by rules that require them to keep their paycheck in exchange for not having to repay the money.
Scratch, a lending service company, said when it recently made applications available to an initial pool of lenders that nearly one-third of them would fill out forms in the first week.
“If they want to be free and clear about how they might need to adjust their business operations, it would be better to ask for forgiveness when it is available,” Wade told the Small Business Association.
The more time-consuming banks include some of the nation’s largest – JPMorgan Chase, Bank of America, Wells Fargo, US Bank and PNC.
U.S. Bank spokesman Greg Vadala said the creditor expects many small businesses to wait to apply, “allowing time for additional SBA guidance and potential moves by Congress to streamline the forgiveness process.” The bank tests its systems and processes with a small number of customers.
“Some legislative proposals currently under review will significantly affect the screening of applications, including those of loans under $ 150,000, which reflects up to 93 percent of our PPP loan to date,” said Wells Fargo spokesman Manuel Venegas. “We know that customers have seen many shifts and challenges throughout the PPP process, and we want to ensure that we maintain our commitment to helping as many small businesses as possible with this process.”
The gridlock of Congress is just one factor in why banks are taking a wait-and-see approach.
In addition to seeking more guidance from the SBA, banks say they also want time to test the agency’s systems for handling applications. Technology glitches plagued the program when an unusual number of companies applied for help through the agency after the loans became available in April.
“Based on the correspondence we have received from SBA, it seems that they may not be very ready to process without delays, questions or kinks,” Blankenship said. “Honestly, we did not want any of our best customers to be the beta test subjects, who as a result of the bad experience with SBA processing could negatively reflect on their experience with our bank.”
JPMorgan Chase will hold until late August or early September to begin submitting requests for forgiveness. Spokeswoman Patricia Wexler pointed to a “complex integration” with the SBA’s interface and said the bank is actively building and testing its digital application now that it has specifications from the agency.
While JPMorgan supports automatic forgiveness for loans of less than $ 150,000, “We are not waiting for the legislation because we know our customers want to start asking for forgiveness as soon as possible,” she said.
The American Institute of CPAs encourages thousands of accounting firms across the country to stop before submitting requests for forgiveness from their clients. In addition to the uncertainty about streamlining applications, legislation is pending that companies can deduct the expenses associated with the loans from their taxes. Business groups also say the SBA needs to provide more clarity on when employers can leave workers without sacrificing loan forgiveness.
People of Paycheck Protection Program have 10 months to submit applications after the 24 weeks they have to use the money and still qualify for maximum loan forgiveness.
“Wait for the potential application for simplified forgiveness,” said Erik Asgeirsson, president and CEO of CPA.com’s technology branch of the accounting association. “Wait for the final guidance.”
