Borrowers Should Now Focus on Forgiveness
On May 31, 2021, the Small Business Association stopped accepting lender applications for new first- and second-draw Paycheck Protection Program loans. SBA has until June 30, 2021, to process those PPP Loan applications. For more information on PPP loans, see the SBA PPP FAQ.
To date, the SBA has approved some 11.8 million loans to the tune of $800 billion. Loan data specific to franchised dealerships indicates that, as designed, the PPP successfully kept hundreds of thousands of dealership employees on payrolls during the height of the COVID-19 pandemic.
Dealer PPP borrowers should now focus on PPP loan forgiveness. Upon receipt of a forgiveness application, a PPP lender will make an initial recommendation to SBA, which in turn will make a final forgiveness decision. Of the 5.2 million PPP loans approved in 2020, 3.3 million have been forgiven and 145,000 are under review, leaving 1.7 million forgiveness applications to be filed with SBA. To date, SBA has yet to reject a loan forgiveness application in full. Note: a PPP borrower that fails to file for forgiveness within 10 months after the end of its covered period must begin making loan payments. For more loan forgiveness information, see the NADA Coronavirus Hub.
In addition to PPP loan forgiveness, dealers are encouraged to review the potential availability of employee retention tax credits (ERTCs) with their legal and financial advisors. An NADA webinar covers the ERTC in some detail.
Questions on these matters can be directed to [email protected].