When I called her, Jackie Laundon was already on the phone and she tried to get a reply from the bank on how to waive her Paycheck Protection Program (PPP) loan. She was put on hold twice before being transferred back to the original menu. She was no clearer than when she called 45 minutes ago. This is her second attempt to reach the bank by phone.
Laundon is a public health consultant in Denver, Colorado. She is the sole owner of state and local government agencies and started operations in the state at the end of last year. When the Covid-19 pandemic hit, the two major contracts were about to end. She was unable to carry out normal networking work, so she was unable to carry out more work. The public health agencies she usually works with have suffered from budget cuts. So she decided that it needed some help to pass, and PPP seemed to be the “most straightforward”
When Congress passed the CARES Act in March, the PPP was created to send billions of dollars through banks to billion-dollar companies that were widely blocked during the pandemic. These loans are mainly used to pay wages. This is a way to prevent the company from failing while maintaining the company’s income. If used properly, these loans will be completely forgiven.
However, it is no easy task to get the forgiveness of the $15,000 tiring reward. She tried to find out the conditions for forgiveness the day after obtaining the loan, but her lender did not have that information. The Small Business Association (SBA), the federal agency that oversees the plan, initially issued rules stating that the money must be used up within 8 weeks, so Laundon did just that. “I thought,’Well, it’s been eight weeks, where is my forgiveness application?'”
Laundon has been checking its lender’s website for the next five months to see if there is anything about how to apply for forgiveness, but it was not until early October that she was told that she could start applying for forgiveness. By mid-October, she still could not submit an application. There is a deadline for applying for forgiveness: business owners must apply within 10 months after the end of the PPP loan to avoid having to start repayment.
The SBA released the “EZ Application” for PPP forgiveness on June 16, but business owners cannot directly submit the form to the agent-they must go through the lender instead. Both banks and SBA barely played a role.
According to data from the Government Accountability Office, as of September 8, the SBA had only received about 56,000 decisions on whether to forgive bank loans-only 1% of the 5.2 million loans issued. As of October 1, no one actually forgives. At the same time, the SBA issued new information and rules on July 23, August 4, and August 11. By August 14, it had not yet completed the process of reviewing lenders’ decisions. The SBA said on October 1 that it will begin to forgive loans after banks and borrowers complain.
Laundon is not the only small business owner who is anxious, because the process has been delayed, she is waiting for a chance to obtain a forgiven PPP loan. In a survey of 93 small business owners conducted on Vox in late September, the Main Street Alliance found that 39% of small businesses tried to start the forgiveness process but were told that their bank was not ready. More than one-third of people worry that the long process will cause them to bear potential debt, which will affect their credibility. It is unclear whether purchasing power parity loans are taxed as operating income or expenditure, which makes tax planning at the end of the year more complicated.
Kevin Brown, the owner of the printing services company Smart Set, based in Minneapolis, strictly abides by the rules of the plan and uses his $35,000 PPP loan for salary and other expenses within an appropriate time frame. “Then it was like,’Well, what’s the next step?'” he said. “The answer is,’Good luck, you are alone.'”
After the SBA publicly condoned the paperwork, Brown immediately downloaded it and spent three hours contacting his bookkeeper. They haven’t even finished it yet, but they are able to list all the documents needed and fill out the application form. At the end of June, he contacted his banker about how he should handle paperwork. His banker told him not to remit. That was the last time he received any information about PPP forgiveness from the banker.
Brown said: “I have never asked the government for charity.” “I am very willing to insist on bargaining. But at some point, what is the government’s bargaining goal?” While he was waiting to submit the forgiveness application, he had been waiting for the purchase originally scheduled for New equipment purchased in early March.
At that time, Brown had talked to his banker about extending the loan for another device, and he had just paid off the other device to pay for it. Now, since he is facing the busy seasons of November and December, he is eager to actually buy it. But Brown has an outstanding loan of $35,000 on his account, so even if they both know that the PPP loan should be forgiven, his banker cannot issue a new loan.
Davis Senseman, an attorney who works with small business owners in Minneapolis, once believed that they have now closed their cases with their clients, hoping to forgive their loans now. Instead, they have customers calling, anxiously saying that they are observing the accrued interest on their PPP loans. Senseman said: “It’s hard to tell them…’We can’t forgive it yet.’ Others have decided not to use PPP funds just in case. Some customers even refuse to let employees return to work.
Senseman is still waiting to apply for its own $16,500 PPP loan. They realize that all small business clients cannot pay for the work done in January and February because they only applied after the business closed in March. They strictly follow the rules of the procedure. They said that despite this, they are still “100% sure” that the rules will not be changed again. Senseman said: “This has to pay a huge price.” “I hope this should not be debt rather than debt.” Moreover, if it does become debt, or even part of it, it will be a “burden”, forcing Senseman to start demanding Customers who still cannot pay.
Michael Fusco-Straub, co-owner of Books Are Magic, a bookstore in Brooklyn, New York, has not yet been approved to apply for forgiveness for his $100,000 loan. He was told in July that it would start in August. He was told September in August; when we spoke in October in September of October, he said that the last time he was told was November. He assumed that “their goal is not to forgive”, so he plans to do everything possible to be absolutely correct. He said that if you don’t forgive, it will be difficult.
For Laundon, the delay in obtaining forgiveness meant that she did not use PPP funds in the way she expected. She said, “I have been spending a few cents,” to make sure she has $15,000, just in case she has to pay it back. She has been marketing for smaller research projects outside of her business to earn more income. She did not get a customized email suite, nor did she set up her own website to build more business. She cannot take courses that normally require investment to obtain a higher certificate and allow her to charge higher fees. She said: “Anything I think can be reduced, can be reduced.”
Even if the forgiveness process actually begins, many business owners are not sure what paperwork they need. 68% of Main Street Alliance survey respondents worry that the process is still unclear. Two-thirds said that because of the many changes in the plan, they don’t know what can be forgiven, and more than half feel that Confusion requires documentation. The details are important: about two-thirds of people worry about not being forgiven, while 43% worry that if they feel the decision is unfair, they will have no right to recourse.
It is not difficult for Laundon to apply for a PPP loan: She filed a profit and loss statement from January and February of this year (actually the months when she had income). She hopes that the bank’s long delay will allow her to apply for forgiveness because the bank has established a portal that also makes the process easier.
Instead, her bank told her that she needed to submit different documents to be forgiven: it wanted her to send form 941, which small businesses with employees would submit to the IRS to show the tax withheld from workers’ salaries. And a C form for 2019, the sole proprietor submits documents to the IRS when paying taxes. But she has no employees and only operated for four weeks last year. She did not start to make money, but there were start-up costs, so she lost money during that period.
Every time Laundon sends an email explaining and asking what can be submitted, she will receive a form reply telling her to send 941 and ScheduleC. “The right hand is not really using the left hand. No one seems to be using the left hand. Understand what is needed,” she said.
Laundon turned to SBA’s website and accounting blog to try to figure out what lenders should ask her for. She pointed out: “This is the time we spend a lot of unpaid time to provide this document.” “I am a person who likes to make sure all Ts are crossed and my Is dotted line. I just hope they are very clear about what is needed. “
Brown’s situation is more direct. However, even if he is not sure, once he can submit the forgiveness paperwork, whether it can be removed. The plan requires business owners to spend 75% of their salary on wages, but it has never explained whether it must be on the same employee the same time as before the pandemic, or whether things can be transferred-this is his purpose. It was ultimately related to his employees. Even his banker did not know the answer. He said that if there is no forgiveness, it will be “disastrous consequences.”
Lawton said: “The whole thing was ridiculously executed very poorly.” “But it’s really ridiculous, because it’s people’s livelihood.”
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