WASHINGTON, DC – JUNE 30: Federal Reserve Chairman Jerome H. Powell and the US Secretary of the Treasury. … [+]
Less than 24 hours after the close of the Paycheck Protection Program (PPP), Congress has breathed new life into the loan program. On Tuesday night, the Senate unanimously passed a bill that would keep the program accepting applications until August 8. The unanimous approval of the bill allowed the Senate to set aside procedural rules to speed up procedures.
On Wednesday night, the House approved its extension, also unanimously. The move will now go to President Trump for his signature.
Under the program, the SBA had approved nearly 4.9 million loans, totaling $ 520.6 billion. Despite the show’s popularity, it had roughly $ 130 billion in unallocated funds when it closed. Since there is a lot left in the program, some advisers question the point of providing an extension.
“I really don’t think there’s much need for an extension,” said Brian Streig, CPA and Director of Taxation at Calhoun, Thomson + Matza, LLP in Austin, TX. “It would be a better change to allow a second loan or to have a different type of money.” He added, “My clients who need money have now obtained their PPP loan and spent it.” The fact that some places are quarantined again makes this problem more pressing.
On the other hand, the extension can save time for business owners who previously had trouble gathering their information. “We forgot that there are do-it-yourself taxpayers who were dramatically impacted and didn’t have a relationship with an accountant or tax professional before Covid-19 hit,” said Nayo Carter-Gray, enrolled agent and owner of 1st Step Accounting in Baltimore, Maryland. . “They had to find someone to help them apply, and when they did, the accountants were already overwhelmed and had to ‘snap them in.'”
The extension also exacerbates problems caused by interactions with other loan programs. “Those who first obtained Economic Injury Disaster Loans (EDIL) and plan to apply for PPP now must ensure that those funds are not used for the same purposes,” said Nicole Davis, CPA and director of Butler-Davis, a law firm. accounting in Conyers, Georgia. Even with extension, there is likely to be more stimulation on the table.
Automatic forgiveness at the table too
Last night, U.S. Senators Kevin Cramer (R-ND), Bob Menéndez (D-NJ), Thom Tillis (R-NC) and Krysten Sinema (D-AZ) of the Senate Banking Committee introduced the Small Forgiveness Act. Check Protection Companies. Specifically, the ACT would forgive PPP loans of $ 150,000 or less if the borrower submits a one-page certification form to the lender. It also ensures that the lender will be immune from any enforcement action if the borrower’s certificate contained falsehoods.
According to Senator Cramer, there are 3.7 million PPP loans of $ 150.00 or less, for 85 percent of all PPP-approved loans. However, those loans are only 26 percent of the PPP funds delivered. “The cost of applying for forgiveness of a PPP loan of this size is $ 2,000 for the small business and $ 500 for the lender,” it said on its website. He adds that the legislation could save small businesses $ 7.4 billion and banks nearly $ 2B.
This would be a welcome change not only for small businesses but also for tax professionals. “The PPP and EIDL programs took up a lot of time and resources from my company,” said Eric Pierre, CPA and director of Pierre Accounting in San Diego, California. “We spent hours and hours helping clients and they didn’t pay us because the banks were not complying with the law.”
Adam Markowitz, Enrolled Agent and Vice President of Howard L. Markowitz PA, in Orlando, Florida, agrees: “Automatic PPP forgiveness is something everyone has been screaming about for months.” He added, “As long as they are subject to possible fraud audits like any other tax document, that’s good enough to push the program out of the minds of Congress, banks, small businesses, and those who helped prepare of these PPP forms. “
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