Will the SBA Modify PPP Forgiveness
to Just a Simple Signature?

COVID-19 Business Update

Business Advisory Services Group

Ready to power up your Excel spreadsheet to start calculating your Paycheck Protection Program (PPP) loan forgiveness amount?   What’s your hurry?

Mark Schmidt, CEO of the non-bank PPP lender FundEx Solutions Group, is predicting there is a “very good chance” Congress will change the rules of the program, potentially making it as simple as a signature to have loans for less than $2 million forgiven.  “There are more reasons to delay than there are to file,” Schmidt said during a recent  live Facebook Q&A hosted by

Schmidt said most borrowers would be wise to take their time with the forgiveness process.  Many banks and lenders are holding off on processing forgiveness applications because they are waiting to see what will happen in Congress, and hoping for more guidance from the SBA, he said. He also noted that businesses that expect to have their 1%-interest loans forgiven will have the interest forgiven too — so there are few reasons to rush.  Schmidt is predicting Congress will save many small business owners from the headache of having to fill out lengthy forms.  “From day one there has been a push to simplify the forgiveness process,” he said.

Currently, the HEALS Act, proposed by Republican senators, would allow borrowers with loans less than $2 million to apply for forgiveness without having to submit paperwork showing how the money was spent. Borrowers would simply be required to “certify” they spent the PPP funds on expenses deemed eligible under the program.  Schmidt notes the “vast majority” of borrowers have loans of less than $2 million. This bill would affect all of them.

Small business owners with loans for less than $150,000 would only have to certify they spent the money on eligible expenses. Those with between $150,000 and $2 million would have their application forwarded to the SBA, potentially for review or audit, though Schmidt said that’s unlikely.  Also, all businesses with PPP loans would still have to retain receipts and documentation for how the money was spent, he said. Businesses need to maintain the documentation for three years.

A borrower may apply for loan forgiveness any time on or before the maturity date of the loan, including before the end of the Covered Period (the 24 week period when PPP loan proceeds must be spent) if the borrower has used all of the loan proceeds for which they are requesting forgiveness (i.e., a borrower can file its loan forgiveness application before the end of the 8-week or 24-week period). If a borrower does not apply for loan forgiveness within 10 months after the last day of the covered period, the loan is no longer deferred, and the borrower must begin paying principal and interest.

The information presented here should not be construed as legal, tax, accounting, or valuation advice. No one should act on such information without appropriate professional advice and after a thorough examination of the particular situation.