[Hidden-tech] Squirly laws in PPP Loan Forgiveness

Thu Sep 24 13:50:52 UTC 2020

Think of it: what does waiting do, on average out there?

Over weeks and months in 2020, more businesses are more likely to reduce employees and/or pay per employee. The PPP loan funds get spent, and then the economy, dismal outside of Wall Street, accelerates this reduction.

Many small businesses are sole proprietorships, or S-Corps, or C-Corp owned by one or few. Changed laws require that they must calculate forgiveness differently from when they first applied to PPP. Yes, changed rules allow a little more non-payroll calculated in forgiveness, but, on average out there, that math does not pan out favorably, at least as far as I can tell now.

My firm would make full forgiveness almost no matter how you slice it because we in fact kept up payrolls (by luck three big clients actually benefitted from the pandemic), but I worry that once one forgoes the deal one signed, one is open to any future changes to come. Follow the money: who gains by this? To answer that question, it helps but is not necessary, to understand just how crucial debt, even shady debt, is to capitalism today.

Bottom line is that to sign for a substantial loan under the terms extant upon signing should absolutely entitle one to proceed according to the terms "in effect at the time" (SBA & Treasury Dept.), and not be subject to new terms. That seems the interesting legal matter here.

Take Care,

Rob Laporte

Chief Business Development Officer | Founder | Chairman

DISC, Inc. - Making Websites Make Money

413-584-6500

rob at 2disc.com<mailto:rob at 2disc.com> | LinkedIn<https://www.linkedin.com/in/2disc/> | 2DISC.com<https://www.2disc.com>

NOTE: Emails can be blocked by spam filters throughout the web. If you don’t get a reply within an expected span of time, please call.

________________________________
From: Hidden-discuss <hidden-discuss-bounces at lists.hidden-tech.net> on behalf of Rich at tnr via Hidden-discuss <hidden-discuss at lists.hidden-tech.net>
Sent: Wednesday, September 23, 2020 6:48 PM
To: hidden-discuss at lists.hidden-tech.net <hidden-discuss at lists.hidden-tech.net>
Subject: Re: [Hidden-tech] Squirly laws in PPP Loan Forgiveness

I got this from Paul Peter Nicolai, a local lawyer many of you might know (on 8/12), and, after all, a month old.

Many are aware that the time for filing the paperwork necessary to show that all or part of your payroll Protection Program loan should be forgiven is coming up.

There are two reasons why you should hold off on trying to file anything.

  1.  First, exactly what is needed is not quite determined and banks are in different stages of being ready to accept the paperwork.
  2.  Second, ongoing negotiation between the administration and Congress that is such that PPP loans under some threshold - likely to be about $150,000 - are simply going to be forgiven without any requirement of proof being filed. Of course, we will not know whether this is the case or what level it would apply at until there is a negotiated deal passed by Congress and signed by the president.

See: https://www.masslive.com/business/2020/08/small-business-administration-has-opened-its-paycheck-protection-program-forgiveness-portal-heres-why-many-small-businesses-will-have-to-wait.html

On 9/23/2020 5:21 PM, Rob Laporte via Hidden-discuss wrote:
Hi All,

It's hugely complicated, and I expect to resolve it via my firm's CPA soon, but meanwhile I wonder if this recap to my CPA resonates with any others of you trying to battle the effects of banking lobbyists working to reduce US-wide PPP loan forgiveness:

When I applied to the loan on 4/9, calcuations were based on payroll, no S-Corp [or C-Corp] owner distinction. So I applied for the amount I did based on that. The later rule change regarding S-corp owners seems wrong--it changes the terms of the loan after making a business decision to get the loan at all--hence my thinking it's best to invoke:

“Borrowers and lenders may rely on the guidance provided in this document as SBA’s interpretation of the CARES Act and of the Paycheck Protection Program Interim Final Rules (“PPP Interim Final Rules”) (link). The U.S. government will not challenge lender PPP actions that conform to this guidance, and to the PPP Interim Final Rules and any subsequent rulemaking in effect at the time.” (

https://www.sba.gov/sites/default/files/2020-04/Paycheck-Protection-Program-Frequently-Asked-Questions_04%2024%2020.pdf 4/24/20)

Also, I applied based on rent paid, regardless of later rule changes negating forgiveness for rent paid to the business owner or to a relative of the owner.

But if other ways to slice this will work for getting all forgiveness, I'd do that, being cognizant of the National Law Reivew's warning that choosing any rules after one's PPP loan application date (4/9 for me) could mean "that to be eligible for this safe harbor, borrowers may need to keep all full time equivalent employees employed even after the covered period ends" up to 12/31/2020.

I coud write a small book on the many ways that the ever-changing PPP rules/laws together with PR lure small businesses into taking the bait on the 24-week option and/or delying forgiveness application, which reduces forgiveness and increases debt. And forget about the PR about all loans under 150G maybe being forgiven automatically--it spurs more delays in forgiveness applications, which will benefit the big banks that buy the books of PPP loans from small banks and then change the rules (the CARES Act allows that) for profit and perhaps collateralize some of the debt into CLOs to sell to investors.

But to keep focus, I wonder if anyone has insight on the legality of in fact invoking the laws that were in effect when one applied to the original PPP loan, so as to obviate all later rules.

Take Care,

Rob Laporte

Chief Business Development Officer | Founder | Chairman

DISC, Inc. - Making Websites Make Money

413-584-6500

rob at 2disc.com<mailto:rob at 2disc.com> | LinkedIn<https://www.linkedin.com/in/2disc/> | 2DISC.com<https://www.2disc.com>

NOTE: Emails can be blocked by spam filters throughout the web. If you don’t get a reply within an expected span of time, please call.

_______________________________________________
Hidden-discuss mailing list - home page: http://www.hidden-tech.net
Hidden-discuss at lists.hidden-tech.net<mailto:Hidden-discuss at lists.hidden-tech.net>

You are receiving this because you are on the Hidden-Tech Discussion list.
If you would like to change your list preferences, Go to the Members
page on the Hidden Tech Web site.
http://www.hidden-tech.net/members

--
Rich Roth
CEO TnR Global

Bio and personal blog: http://rizbang.com
Building the really big sites:      http://www.tnrglobal.com
Small/Soho business in the PV:        http://www.hidden-tech.net
Places to meet for business:        http://www.meetmewhere.com
And for Arts and relaxation:
http://TarotMuertos.com - Artistic Tarot Deck
   http://www.welovemuseums.com
   http://www.artonmytv.com/
Helping move the world:             http://www.earththrives.com
-------------- next part --------------
An HTML attachment was scrubbed...
URL: <http://lists.hidden-tech.net/pipermail/hidden-discuss/attachments/20200924/e9a611e6/attachment.html>