The Paycheck Protection Program launched round 2 of small business loans on April 27th. Almost immediately, banks voiced complaints about the lack of ability to get loan applications submitted, or even be able to stay logged into the software designed to accept applications.
But by the end of the week, lenders were feeling less frustrated.
Loan forgiveness for the Paycheck Protection Program seems simple as long as loan proceeds cover payroll expenses, mortgage interest, rent, and utilities over the 8 weeks after the loan is made.
However, there could be some challenges to small business owners associated with the following:
- Correctly computing the forgiveness amount.
- Tracking allowable expenses.
- Filing taxes.
Banks are also facing challenges with regard to the following:
- Servicing the non-forgiven portion of loans.
- Debt-categorization.
- Audits.
- Customer Service.
Small community banks are also facing their make or break moment with the PPP loan program and the coinciding loan forgiveness program.
“Community banks are looking at a big opportunity with small businesses—if they can overcome the loan forgiveness nightmare.”