Construction Companies with PPP Loans Are Likely to See the Loan Forgiveness Process Eased

Construction Companies with PPP Loans Are Likely to See the Loan Forgiveness Process Eased

The construction industry has been one of the hardest hit during Covid lockdowns. Existing projects were put on hold and new business slowed to a crawl in most parts of the US. Construction companies large and small saw residential and commercial project revenue tank and government contract funding dried up.

In order to help keep their doors opened and retain many of their employees, general and independent contractors took loans under the Paycheck Protection Program (PPP), created by Congress as a part of its Covid-relief legislative packages. These PPP loans were instrumental in keeping many construction concerns in business and their staffs employed. The Small Business Administration (SBA) stopped accepting applications for PPP loans on May 31. During the 14 months the program was accepting applications, it provided $800B in forgivable loans to almost 12M businesses; many of them construction businesses.

Construction Business Concerns

In November, the SBA began requiring that businesses complete a “loan necessity questionnaire” providing a “good faith” certification when applying for a PPP loan of $2M or more, asking for significant documentation about how businesses subsequently performed after receiving the loan (and additional items).

The Associated General Contractors of America (ACG) sued the SBA saying the questionnaire was developed in secret and without public input. Almost 500 members of the ACG had taken PPP loans in excess of $2M and very few had received forgiveness from the SBA.

Over the last several weeks, the ACG and the SBA were in negotiations to withdraw the questionnaire. Recently, the SBA informed the ACG that it intended to eliminate the requirement for completion of the questionnaire, pending an interagency review.

The elimination of this certification requirement will ease the concerns of construction (and other) companies who had taken these PPP loans in anticipation of loan forgiveness without the necessity for additional documentation.

Login to read more on CCHAnswerConnect.

Not a subscriber? Sign up for a free trial or contact us for a representative.