Many in the banking industry are warning that tens of thousands of PPP Loans that are now coming due, will go unpaid. The number of businesses that have closed, in addition to those that have fallen on hard times, makes this a given.
Nearly a quarter of small businesses have considered closing their doors and another 12% are currently facing bankruptcy. The question now becomes how will this affect the future?
When a PPP Loan defaults, it works similarly to any of the other SBA 7a Loan Programs. The difference is that the SBA guaranteed a 100% repayment on these loans rather than their normal 85%.
After a default, the bank will ask for and be repaid the entire amount lent to the borrower by the SBA. At that point, the SBA will begin its process of trying to collect on the default.
These loans are unsecured, which severely ties the SBA’s hands on what they can do to collect. They can come after you, but can’t do very much to extract the funds.
At the very least, the borrower will no longer be able to do any business with the Federal Government in the future. There have been few headlines recently about the program, but the coming months will probably be primarily about a radical increase in defaults.
Let me leave you with this.
We’re about three weeks ahead of the March 15th deadline for Regular and S-Corp income tax returns. If your final answers are not in by March 1st, your return will be automatically extended.
This extension gives us another 6 months to file the “paper return”. It doesn’t extend the deadline for any payments that may be due. Tax deposits are necessary with extensions to stop any potential failure to pay penalties.
If you’d like to make a deposit with the extension, please contact our offices at your convenience.
We’re all going to get through this. Let’s get through it together.
Accounting Solutions Ltd. stands ready to complete our mission and purpose of protecting you, your family, and your business. Whether you need Employee Retention Credits, PPP Loan Forgiveness, Payroll Services, or Accounting and Tax Work, you have but to ask. I’m here and I remain,
Sincerely yours,
Chris Amundson
President
Accounting Solutions Ltd.
773-267-7500
www.AccountingSolutionsLtd.com
Note that the only professional services provided by Accounting Solutions Ltd. are those specified in a written communication from our office detailing the scope of services to be rendered and the terms and conditions applicable to the engagement.