Although the Small Business Administration (SBA) opened its Paycheck Protection Program (PPP) forgiveness portal Aug. 10, many contractors have found their banks are not ready to accept applications. The portal allows lenders to submit completed PPP loan forgiveness applications to the SBA for its review.
This means small businesses across the country — including hundreds of thousands of contractors — that took money from the government assistance program designed to keep workers on the job during the COVID-19 pandemic, have to wait to submit their applications and find out if their loans will be forgiven.
Many banks have indicated they are waiting to see if new guidance or legislation will streamline the forgiveness process. They also want to see if Congress will pass legislation providing automatic forgiveness for loans of $150,000 or less.
Major lending institutions such as JPMorgan Chase and PNC have not begun accepting forgiveness applications, according to their websites. Some banks, however, are accepting applications, said Jack Callahan, a CPA and industry lead of CohnReznick’s construction practice. These applications are awaiting approval by the SBA, he said, adding that he has not seen any SBA approvals yet.
Meanwhile, questions abound about several aspects of the forgiveness program. Most notably, some contractors are wondering whether to apply for forgiveness because of an IRS ruling might mean they pay more in taxes than to pay back the original loan. In a notice this spring, the IRS said it had ruled out tax deductions for wages and rent paid with forgivable PPP loans to prevent a “double tax benefit.”
The sooner contractors are able to submit for forgiveness, the sooner they will be able to contemplate the ramifications on their financial statements and tax returns, Callahan said.
It’s also important to note that some banks will not accept the forgiveness application until either the eight- or 24-week period by which borrowers need to use their funds is completed since those are the options that are listed on the forgiveness application, he said.
Callahan’s advice to construction firms that have yet to apply is to work with their team of advisors to assemble the forgiveness application and supporting documents and be ready to submit when their bank is.
“It is in the best interests of the small business to achieve maximum forgiveness and submit a true and accurate certification based on the guidance available at the time of their submission for forgiveness," he said. "Each small business should consult with their respective qualified trusted business advisor to make sure they meet all of these requirements to achieve maximum forgiveness."
Here is an overview of what some of the country’s top banks are telling customers about the forgiveness process:
The bank is encouraging customers to review materials and be on the lookout for an email in the coming weeks inviting them to request forgiveness.
Bank of America plans to email customers specific instructions on how and when they can apply. Applications must be submitted digitally, the company notes on its website.
The company says its loan forgiveness application is accessible through each customer's online Citi account.
The bank advises customers that it will send an email once the Wells Fargo PPP loan forgiveness online application becomes available. In the meantime, it offers advice on how to gather the recommended supporting documents and how to prepare the application.
The bank is rolling out loan forgiveness applications in phases. Customers will receive an email invitation when it's time to apply for forgiveness, its website says.
PNC says it is continuing to develop its digital PPP forgiveness application and enhance the process based on feedback from a customer pilot program. It also says it will alert borrowers with an email notification once the PNC digital application portal is available to accept applications.
As of Aug. 31, the bank said it is testing its loan forgiveness portal, and that borrowers will receive advance communication as soon as the portal is available.
Fifth Third is accepting PPP forgiveness applications via its online self-service application portal, according to its website. Borrowers will receive an email with login instructions in waves occurring through the end of September. In preparation, Fifth Third has emailed all primary signers a SBA PPP Loan Forgiveness Tool Kit to help them prepare.