By Jay L. Morse

Since the passage of the CARES Act, Kemp Klein has been happy to provide general information regarding the development of the law as regulations continue to roll out, especially as these regulations pertain to small businesses.  In the past, we have provided general information respecting various parts of the Paycheck Protection Program (PPP) and this article is intended to supplement that information.  Specifically, this article addresses the developments in the PPP as they relate to the loan forgiveness process.

To receive loan forgiveness, a borrower must complete and submit the Loan Forgiveness Application to its lender.  The lender will then review the application and make a decision regarding whether to approve your loan forgiveness, and how much loan forgiveness to which you may be entitled.  The lender has 60 days from its receipt of the Loan Forgiveness Application to provide its decision to the US Small Business Administration (SBA).  Upon receiving a decision from the lender, within 90 days the SBA will remit the appropriate forgiveness amount to the lender plus interest accrued through the date of payment (subject to possible further review by the SBA itself). If only a portion of the loan is forgiven, or if the forgiveness request is denied, any remaining balance due on the loan must be repaid by the borrower on or before the two-year maturity of the loan.  The key takeaway here is that PPP loan recipients may have to wait up to 150 days after applying for loan forgiveness to learn whether it was approved.

Please be aware that the articles we provide are non-comprehensive due to the extensive and complicated nature of the newly drafted legislation.  As a result of the rapid pace at which this bill took form, government entities continue to make made changes to this program and there are still many unanswered questions.  One cannot express the importance of having a legal professional perform a fact-specific analysis of a business’s situation in light of this evolving program.


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