PPP loans have started close to six months ago. Many have have been used up by the businesses in full. What are the next steps and options? Are there any new programs that will become available?
Applying for forgiveness
As of August 11, 2020, the latest date that both the SBA and the Treasury have updated their FAQ sections on the subject, the application form for forgiveness remains to be Form 3508 or 3508EZ. Lenders might request their own form similar to be the SBA version. Electronic signatures and scanned copies are acceptable.
SBA has opened the acceptance period on August 10 2020. However, major banks, such as Chase, are not yet collecting these forms from their borrowers. This is due to the fact that the guidance might change yet again. Additionally, there is a possibility that loans under $150,000 will be automatically forgiven.
Revisiting the Profit & Loss
If the business has only relied on the loans to continue operating, without analyzing the costs and figuring out what should stay and what can be lowered, this is a good time to look through the Profit & Loss in more detail.
Talk to your vendors. Request for better payment terms if possible and if you haven't already tried to negotiate with them. Look into programs, such as the ones offered to Chase or Capital One business customers, that offer discounts or cash back without the business having to request a break from the vendor that might be struggling as well. Capital One has a program called Spring that has no membership fee. Chase pays cash back for certain offers activated through the business account online login.
Deferring the payroll tax
If you have been following the news or are on a mailing list of a law or an accounting firm, you are most likely familiar with the dilemma of whether or not to participate in the payroll tax holiday. Here is one fact that rarely gets mentioned - although participation is voluntary and employees cannot require their employer to enroll, the Federal Government is one employer that has opted in.
The rule can and might be challenged. But for those willing to accept the risks, there is a chance that the deferred amount will be forgiven in 2021. As a short term cash solution, it is one of the options on the table.