There has been a lot of recent chatter about the Payment Protection Program (PPP) money, who got it, who didn’t, and even if some companies should pay it back.

Well, we have some thoughts on this for you today, but ultimately, you will have to be the one who makes this decision.

It’s an easy decision if you desperately needed it. And if that’s you, conversations about forgiveness, paybacks, etc. are purely academic.

Whether it’s deductible or not … you need the cash to stay afloat, and it’s a great shot in the arm. Yes, forgiveness matters … but at 1% interest (at the worst), it’s a great deal regardless.

But what if your business isn’t completely shattered by COVID — should you pay it back?

Well … it depends. We have some inside scoop on this question.

You see, one of the reasons that “Round 1” of the PPP was so disastrous for those businesses that were working with big banks (e.g. BofA, Chase, etc.) is that the smaller, regional banks and lenders employed actual people to manually input applications into the SBA system.

The big banks created their own proprietary PPP applications within their own system — and they were seeking API access to the SBA database, which took some time.

Meanwhile, the smaller lenders were cranking away on their keyboards, pounding in the applications … and getting approved.

And these smaller, regional banks were essentially taking the SBA paperwork and making no changes to it. That original SBA application included the important certification that each applicant had to make that “current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant“.

Some of the larger banks did not include this certification question in their application, and as a result … chaos.

So, about that certification:  Every business will have a different way of establishing whether this was the case.

Certain businesses have established contracts and revenue streams, and the COVID crisis changed nothing. These businesses should strongly consider returning the PPP if they got it. If this is the case for you, talk with your lender.

But for many businesses, the standard isn’t clear. We are still awaiting full guidance.

Our take? If your customers have been affected by the lock downs or the virus, you have a good case for “economic uncertainty”. Locked-in contracts, or businesses with government or Fortune 500 contracts might be the exception … but everyone else: as long as you keep your payroll intact and you manage your forgiveness requirements, “economic uncertainty” is a low bar to clear.

If this is still something that you need to talk through, let’s do so. Shoot us an email or call us: (541) 326-0993.

We’re in your corner.


The Team at Legacy CPA
(541) 326-0993

1322 E. McAndrews, Ste #201
Medford, OR 97504
Office # (541) 326-0993
Fax # (541) 326-0650

We are grateful for our chance to serve you and your business, ~Contact.FirstName~ — and we are dedicated to its success, in every season.

Feel free to forward this article to a business associate or client you know who could benefit from our assistance. While these particular articles usually relate to business strategy, as you know, we specialize in tax preparation and planning for families and business owners. And we always make room for referrals from trusted sources like you. And we always make room for referrals from trusted sources like you.