New Legislation Would Grant Automatic Forgiveness of PPP Loans Under $150,000

The smallest of small businesses may be able to avoid hassling with additional documents, worksheets and payroll/tax forms.

learn more about Mat Sorensen

By Mat Sorensen

Maskot | Getty Images

Opinions expressed by Entrepreneur contributors are their own.

A bipartisan bill called The Paycheck Protection Small Business Forgiveness Act has been introduced into the Senate that would allow small businesses who received a Paycheck Protection Program (PPP) loan of $150,000 or less to obtain automatic forgiveness after submitting a one-page attestation form. The attestation form would be limited to one-page, and the small business would simply attest that the loan is eligible for forgiveness and that the business complied with the requirements of the Paycheck Protection Program found in the CARES Act.

The legislation would be beneficial to the smallest of small businesses that received PPP loans of $150,000 or less, as well as the banks who lent to smaller PPP borrowers, by reducing the paperwork and documentation requirement currently required on all PPP forgiveness requests. These "smaller" small businesses, sometimes called "micro small businesses," generally do not have in-house accountants and payroll departments to rely on for PPP professional assistance, and engaging an outside accountant or attorney for professional services isn't something they do on a regular basis. These smaller PPP borrowers include a significant number of sole proprietors, independent contractors and one-person operators, as well as persons who have a "day job" and a side hustle.

Related: The CEO of a Company That Owns More Than 100 Wendy's Allegedly Used $1 Million in PPP Loans on a New House in Montana

Proponents of the legislation have explained that the bill would cover 85 percent of PPP borrowers, but only 26 percent of the funds obligated. Larger small businesses that obtained loans over $150,000 account for the vast majority of funds loaned under the PPP program (74 percent), and they will still be required to complete the standard PPP loan forgiveness application along with supporting financial and payroll records. These larger small businesses, which received PPP loans in excess of $150,000, have greater internal resources and usually work with outside accountants and lawyers who can assist with their PPP forgiveness requests.

Democratic Senator Kyrsten Sinema of Arizona is an original co-sponsor of the legislation and has been an advocate for small businesses during the pandemic. She said in a statement, "Fully forgiving Arizona small businesses' PPP loans provides needed economic certainty to local employers — which have suffered losses through no fault of their own — while protecting Arizonans' jobs and paychecks."

Recent SBA data released on June 30 indicated that PPP loans have supported more than 51 million jobs, but if PPP forgiveness isn't realized for small businesses, then PPP will simply turn into a debt burden on borrowers who are still trying to weather the economic storm.

Related: SBA and Treasury Release Names of PPP Loan Recipients

The bill is pending in the Senate and is supported by small businesses, the American Bankers Association and all 51 state bankers' associations. Banks and other lenders were encouraged by Congress and the SBA to loan to the smallest of small businesses. They are also tasked with processing PPP forgiveness applications on these same loans. By reducing the document and paperwork requirements on the smallest of small businesses, the banks who leant to these borrowers will also benefit, as they will be able to simply their own internal PPP forgiveness process and documentation requirements.

Mat Sorensen

Entrepreneur Leadership Network VIP

CEO & Attorney at Directed IRA & Directed Trust Company

Mat Sorensen is an attorney, CEO, author, and podcast host. He is the CEO of Directed IRA & Directed Trust Company, a leading company in the self-directed IRA and 401k industry and a partner in the business and tax law firm of KKOS Lawyers. He is the author of The Self-Directed IRA Handbook.

Related Topics

Editor's Pick

Everyone Wants to Get Close to Their Favorite Artist. Here's the Technology Making It a Reality — But Better.
The Highest-Paid, Highest-Profile People in Every Field Know This Communication Strategy
After Early Rejection From Publishers, This Author Self-Published Her Book and Sold More Than 500,000 Copies. Here's How She Did It.
Having Trouble Speaking Up in Meetings? Try This Strategy.
He Names Brands for Amazon, Meta and Forever 21, and Says This Is the Big Blank Space in the Naming Game
Business News

These Are the Most and Least Affordable Places to Retire in The U.S.

The Northeast and West Coast are the least affordable, while areas in the Mountain State region tend to be ideal for retirees on a budget.

Business News

I Live on a Cruise Ship for Half of the Year. Look Inside My 336-Square-Foot Cabin with Wraparound Balcony.

I live on a cruise ship with my husband, who works on it, for six months out of the year. Life at "home" can be tight. Here's what it's really like living on a cruise ship.

Thought Leaders

The Collapse of Credit Suisse: A Cautionary Tale of Resistance to Hybrid Work

This cautionary tale serves as a reminder for business leaders to adapt to the changing world of work and prioritize their workforce's needs and preferences.

Business Solutions

Learn to Build a ChatGPT Bot for Only $30

If you want to see what AI can do for your business, grab this course bundle today.

Business News

American Airlines Sued After Teen Dies of Heart Attack Onboard Flight to Miami

Kevin Greenridge was traveling from Honduras to Miami on June 4, 2022, on AA Flight 614 when he went into cardiac arrest and became unconscious mid-flight.

Health & Wellness

5 Essential Steps to Expand Your Vision and Start Living Your Dream Life

It's time to break free from your comfort zone and expand your vision. When you refuse to settle for a mediocre life, you can start building a life you love.