Published on July 16, 2020
Good news is possibly on the horizon for sole proprietors, gig economy workers, and independent contractors, in the form of forgiveness for approximately 85% of Paycheck Protection Program (PPP) recipients with loans of $150,000 or less.
According to Matt Sorensen's Entrepreneur article, the process of loan forgiveness is being simplified to one page for the business owner to confirm 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 proposed legislation also protects the lender from any legal repercussions if the business owner’s confirmations included false representations upon which the loan was granted.
This is a potential boost for a small business owner particularly as COVID-19 is causing the reclosing of many businesses already facing cash flow pressures, tightening credit availability, and declining consumer demand. According to human resource provider Gusto, worker headcount among small businesses is close to pre-COVID-19 levels; however, many workers are now experiencing reduced hours and lower pay.
Jessica Dickler, CNBC, Personal Finance published a recent survey by the National Federation of Independent Business (NFIB):
* Thirty percent of business owners reported sales as of mid-June that were less than half what they were pre-pandemic.
* 14% of (PPP) loan borrowers said they may have to lay off employees after using the loan.
* Close to a quarter of all small businesses are still considering closing their doors permanently because of Covid-19.
Most small businesses are not in those dire predicaments due to the ability to pivot and retrofit operations to respond to an unimaginably new consumer shopping and dining experience, as well as a potentially forgivable (PPP) loan. As small business owner, Christopher Hoyt of The Pioneer Collective shared, “All of that is enough to keep us around break-even, which has become the new goal when you focus on survival.”