Coronavirus Loan Forgiveness Is Complicated And Confusing

How to make sure you hit it just right? Requirements for using federal coronavirus loans are so complicated and confusing, some small businesses are afraid to spend the money for fear the loan won’t actually be forgiven. Or the timing and delivery of the funds was inconvenient – the money arrived when businesses were still on lock down and the clock on the 8 week “covered period” started ticking!

SBA rules state that business owners have eight weeks from the day they receive the cash to spend 75% of it on payroll to have the loan forgiven. Hard to do for some business owners when many areas are still under strict stay-at-home orders and customers as well as workers can’t easily get out. Why hire workers back when there is no work to do because there are no customers? Consider the restauranteur, construction contractor, beauty salon or spa owner.

How effective can the program be if many of the small businesses that did get loans are holding onto the money, unsure about whether and how to spend it? Some biz owners balk at having to use the money within eight weeks, and would like to keep the financial cushion for longer. Instead of payroll, some would rather spend the money to retool for reopening in a “new normal.” Is there any flexibility? The answer is no, not really.

The PPP Loan program has been riddled with issues and problems from the beginning: lack of funds, overwhelmed portals, big firms getting money earmarked for small biz. The program’s rules are complicated and ambiguous, and new guidance is still evolving. The banks are supposed to be guiding and advising loan recipients but are just as confused. Any economic turnaround could still be months away. We are waiting to see what happens if a borrower decides to hold onto the money and use it for payroll later – will it just transition to a low interest loan or will the SBA and Treasury loosen up the rules and allow for more flexibility? Will the June 30th restoration of workforce provision stay the same?

Even business slowly bouncing back and able to use their loans to rehire workers are concerned this is just a short time fix. At this time we are not sure if there will be another infusion of funds into the program.

Fuoco Group’s pandemic assistance task force has been very vocal about what counts: adherence to strict guidelines requires a complex calculations of FTEs and wages, extensive documentation, proper syncing with payroll records, tracking, an additional bank account, tax savvy, and the advice of financial experts like your TFG CPA. Whew! In case you missed it, our helpful, comprehensive guide to forgiveness is HERE.

Please Reach Out To Us: Fuoco Group has a COVID 19 survival team with PPP Loan experts that can answer all your questions regarding forgiveness, help with calculations and compliance, and assist with business strategy, cash flow projections, budgeting, reducing expenses, etc. We can also help you communicate with your lender and assist with the actual forgiveness process and certification of your information. Email This e-mail address is being protected from spambots. You need JavaScript enabled to view it .