The U.S. Small Business Administration and the Treasury Department are making it easier for companies to get their Paycheck Protection Program loans of $50,000 or less forgiven with a simpler loan forgiveness application and interim final rule.
The new application form and rule were unveiled Thursday night, along with instructions for completing the form.
A subprime-related settlement between the government and Deutsche Bank provided meaningful benefits to some U.S. consumers in need, according to a new report. But the author acknowledged that those gains could prove illusory for some consumers given the coronavirus crisis.
Cathy Lanning serves as Senior Vice President for the Property & Casualty Marketing organization. In this role, she is responsible for the development and execution of integrated marketing plans for personal and commercial insurance products. Together with her team, she builds the brand and the Nationwide business leveraging data-driven direct marketing, partnerships, digital media, social media, cooperative agency marketing and lead generation strategies.
Most recently, Cathy led Strategic Partnerships where she established a large partnership portfolio with a data driven relationship-based selling approach. Together with partners such as alumni associations, cause organizations and sports organizations, Nationwide was able to understand the exact needs of a household and bring the right solutions at the right time to meet their protection needs. Under her leadership, the business unit grew by over 100% in five years.
Cathy joined Nationwide in 2007 as part of the leadership team that launched Nationwide Bank. Throughout her tenure at the company, she has held roles that require innovation, vision and team building. This includes establishing new digital marketing tools for agents, launching new products in the market, and establishing the Marketing Analytics organization. The Marketing Analytics organization delivered the first-generation marketing mix models, comprehensive digital analytics, and forecasting models, all of which helped Nationwide understand marketing effectiveness across channels and identified investment optimization pathways. The insights served the business lines across the company and opened new horizons for efficient growth and retention.
She has broad experience in brand management, analytics, partnership development, direct marketing, distribution marketing, innovation, product development and strategic planning. Prior to joining Nationwide, Cathy was the Brand Manager at The Scotts Company and Product Manager at WorldCom focused on Virtual Private Networks.
Cathy is a proud Ohio State University alumnus, holding a Bachelor of Science in Psychology, a Bachelor of Science in Business Administration (Marketing) and Masters in Business Administration. She is also a graduate from the Northwestern Kellogg Senior Women in Leadership program.
Outside of work, Cathy is a passionate advocate for education and community learning programs. To live this mission, Cathy serves on the board of The Ohio State University Alumni Association, The Girl Scouts of Ohio’s Heartland and The Wellington School.
Shelley Brazeau Temple serves as President of Nationwide P&C Personal Lines. In this role, Shelley is responsible for all aspects of the Personal Lines Profit and Loss (P&L) segment including product, underwriting, sales and distribution, claims and service.
She most recently served as Nationwide P&C Senior Vice President and Chief Claims and Operations Officer. Prior to that, she served as Senior Vice President of Member Solutions, leading the company’s insurance servicing and billing operations and direct phone sales organization.
Other leadership positions she has held are:
- Regional Vice President of Nationwide’s South Central Operations, responsible for sales, pricing, underwriting and product in a six-state geography, and managing a more than $660 million in sales revenue through exclusive agents and direct sales.
- VP of Strategy and Operational Effectiveness for Customer Service and Direct Sales of Nationwide, developing and executing an innovative contact center strategy.
- VP of Personal Lines Service Operations, responsible for personal lines service and processing center operations.
Shelley began her career at Nationwide as a Claims associate 27 years ago. Her increased responsibilities in leadership positions throughout the years also led her to work with internal audits, product and agency sales.
Shelley holds a bachelor’s degree from Bowling Green State University and the Chartered Property and Casualty Underwriting (CPCU) designation. She has served on several non-profit boards, including Ronald McDonald Children's Charities and the American Lung Association of the Midland States with participation in development, audit/finance and executive committees.
The PPP was part of the CARES Act passed by Congress in March to provide relief to struggling small businesses coping with the impact of the novel coronavirus and the economic downturn precipitated by the pandemic. It offered SBA-backed loans that could be forgiven as long as the business met conditions such as retaining employees for eight weeks. However, many businesses have been confused about the ever-changing rules for the hastily rolled out program and for getting their loans forgiven. Until a week ago, no loan forgiveness applications were being approved by the SBA. The SBA and the Treasury hope the new application will make the process a little less difficult for business owners, at least for the many who took out loans of $50,000 or less.
Under the new rule, PPP borrowers of $50,000 or less won’t have the amount of their loan forgiveness reduced based on reductions in full-time-equivalent employees or reductions in employee salary or wages. The newly simplified forgiveness application, Form 3508S, can be used by borrowers with a total loan amount of $50,000 or less, unless they and their affiliates received loans totaling $2 million or more.
“The PPP has provided 5.2 million loans worth $525 billion to American small businesses, providing critical economic relief and supporting more than 51 million jobs,” said Treasury Secretary Steven T. Mnuchin in a statement Thursday. “Today’s action streamlines the forgiveness process for PPP borrowers with loans of $50,000 or less and thousands of PPP lenders who worked around the clock to process loans quickly,” he continued. “We are committed to making the PPP forgiveness process as simple as possible while also protecting against fraud and misuse of funds. We continue to favor additional legislation to further simplify the forgiveness process.”
The SBA started approving PPP forgiveness applications and remitting forgiveness payments to PPP lenders for PPP borrowers on Oct. 2. The SBA said it plans to continue to process all PPP forgiveness applications in an “expeditious manner.”
“Nothing will stop the Trump Administration from supporting great American businesses and our great American workers,” said SBA administrator Jovita Carranza in a statement Thursday. “The Paycheck Protection Program has been an overwhelming success and served as a historic lifeline to America’s hurting small businesses and tens of millions of workers. The new form introduced today demonstrates our relentless commitment to using every tool in our toolbelt to help small businesses and the banks that have participated in this program. We are continuing to ensure that small businesses are supported as they recover.”
Many accountants have been helping their small business clients apply for PPP loans and fill out the loan forgiveness applications. Heather Bain, chair of the Small Business Committee of the Institute of Management Accountants and owner of Bain CPA Business Strategies in Houston, believes the new rule issued by the SBA on Thursday doesn’t go far enough, though, in simplifying the process.
“There weren’t really that many changes,” she said. “In fact the whole rule only reduced the complexities for calculating full-time equivalents and the reduction in wages. That’s it. The rule even says that doesn’t really apply to the majority of those loans that were under $50,000. That’s why they’re allowed under the de minimis rule in the first place. I don’t think we’re going to see that many businesses benefit from that rule. And what most of my clients and companies that I work with have said is that they were hoping for an automatic forgiveness where you don’t have to wait to find out for sure if you are going to get forgiveness, and that was not part of the interim final rule.”
The new rule may well disappoint many small business clients. “They were hoping for a certain loan amount and the forgiveness would just be automatic,” said Bain. “There wouldn’t be a lender decision and an SBA decision. It would just be if you signed your affidavit and completed it and turned it in, you would have automatic forgiveness. But that apparently is not part of any of the discussion with the new interim final rule.”
The changes are estimated to cover approximately 9 million forgiveness applications. “It was a fairly small statistic because many of the loans that are $50,000 or less were partnerships or self-employed or they didn’t have employees or had so few employees that they didn’t have the full-time equivalent [employee] reduction,” said Bain. “They didn’t have the calculation for reduction of wages or any of that. It only applies to those two issues. It doesn’t guarantee forgiveness. It still requires that the borrower provide additional information to the lender, certify how it’s reviewed, and calculate the payroll and non-payroll costs and all of those. All of the other rules still apply.”
The PPP loan application deadline ended on Aug. 8 with over $130 billion left unspent from the funds allocated to the program. House Speaker Nancy Pelosi, D-California, is continuing to negotiate with Mnuchin about reviving the program as part of a larger stimulus package, but Democrats and Republicans remain at odds over the size of the package and whether it should be piecemeal or be an all-encompassing package with relief for airlines, state and local governments, and offer another round of stimulus payments for individuals. However, demand for PPP loans from small businesses appeared to be flagging well before the deadline expired.
“They’re not really interested,” said Bain. “Most of the companies that I work with have mentioned that they’ve already taken the loan if they’re going to take the loan. That’s why there are funds left over. Because there is some exclusivity between being allowed to take certain payroll tax credits and applying for the loan, if they’ve already taken the credits, then they wouldn’t be eligible for the loan. So they’re not going to apply for the loan.”
To help small businesses cope with the recession, she recommends that accountants provide cash flow projections for them. “There are several procedures that companies go through when they’re in receivership,” said Bain. “One of them is the 13-week cash flow and those sorts of reports. That’s what I would recommend businesses look at is analyzing the business as if it were under receivership, and paying close attention to the cash flow and the forecasting from now until the end of 2020 so that they can make very high-quality decisions about how to spend their funds. And talk to a tax accountant about the tax deferrals and the estimated tax payments because the rule is either 100 percent of the tax from last year, which is probably an overestimate for most businesses this year, or 90 percent of this year. So if they’re making a 90 percent deposit for this year, many of the businesses will be OK as long as they do their very best at projecting their income. Especially for the companies that only have a $50,000 or less loan, if those expenses are not ever deemed to be deductible, then they still may have a little bit of wiggle room, depending on how much their revenue actually is.”
Businesses may also be able to take advantage of the net operating loss tax breaks in the CARES Act, which allow losses to be carried back five years.
“That is one of the big changes,” said Bain. “Now they can go back farther than before and so there will be a lot more amended returns once the losses are calculated for 2020 and even into 2021. There are many forecasts saying the market won’t recover until 2022, so 2021 will possibly be a net operating loss for many companies as well. That’s why cash flow management is so important because they may have paper losses because of depreciation and other deductions that are not cash deductions. That may help them significantly with their cash flow.”
The National Association for the Self-Employed welcomed the new SBA loan forgiveness changes. “The announcement by the Administration of a simplified process of loan forgiveness for small businesses who accessed $50,000 and less in PPP loans is an incredibly welcome sign,” said NASE president and CEO Keith Hall in a statement Friday. “We are thrilled about this new SBA and Treasury interim guidance to help small businesses during a time many of them are looking at the last quarter of estimated tax payments and year-end accounting. This newly announced guidance is a welcome step, but it can’t be the last step this year to help the American small business community who are desperate for critical relief now. Therefore, it’s imperative the Administration and Congress come back to the negotiating table and work together to provide the immediate financial relief for the American people and our nation’s small business community.”
