November 18, 2020
C-Suite Wednesday — 5 Things PPP Lenders are Still Waiting For
Although the PPP Forgiveness Platform has been open since August 10, 2020, many lenders continue to tell their borrowers to hold off on submitting their forgiveness applications until additional guidance is released. Here are the top 5 things PPP lenders are still waiting for:
- Guidance on Servicing PPP loans.
According to SBA Procedural Notice 5000-20038, lenders are responsible for servicing PPP loans in accordance with the 7(a) Loan Servicing and Liquidation SOP (SOP 50 57). However, many aspects of servicing a PPP loan are expected to be different from a traditional 7(a) loan. Therefore, many lenders anticipate additional guidance on servicing to be released in the months leading up to the end of the PPP loan deferment period.
- An official release of SBA Forms 3509 and 3510 along with a procedural notice.
The SBA recently issued a quiet release of two new borrower questionnaires on the PPP Forgiveness Platform for loans over $2 million. These questionnaires note specific time limits but do not provide lenders with instructions on when to send the forms to the borrower. An official release with further instructions is expected soon.
- Guidance on whether PPP loans will be taxable on the state level.
Although it was not the intent of Congress to tax PPP loan proceeds on the federal level, some states have indicated their intent to tax it as business income. No official ruling has determined if state taxation of PPP loans will be allowed.
- What to do if a PPP borrower’s business files bankruptcy.
According to a recent article published in the Wall Street Journal, about 300 small businesses that received PPP funding have already filed for bankruptcy. However, the SBA and Treasury have yet to publish guidance on how the lender should go about getting paid the guarantee.
- Blanket Forgiveness
Although the SBA has released SBA form 3508EZ and 3508S to simplify the forgiveness process for some borrowers, many trade groups have been actively pushing for blanket forgiveness (typically for loans under $150,000). As a result, several members of Congress have spoken in support of including blanket forgiveness in future legislation and lenders are encouraging small businesses who took out PPP loans under $150,000 to hold off on applying for forgiveness to see if blanket forgiveness legislation passes.
To stay up to date on the most recent SBA and Treasury guidance regarding PPP loans, join the Coleman Report Live daily show at 10:00 AM Pacific / 1:00 PM Eastern.