Many senior living recipients of Paycheck Protection Program loans have not filed applications for loan forgiveness, according to data compiled by specialty investment bank Ziegler.
The U.S. Small Business Administration, which oversees the PPP, began accepting loan forgiveness applications on Aug. 10. But Ziegler told McKnight’s Senior Living Tuesday that very few of the approximately 200 life plan communities the firm has been tracking have applied to date. Several borrowers have told Ziegler that their bank is not yet accepting forgiveness applications, whereas for others, their 24-week covered period is not yet over. Some borrowers, however, have indicated they are intentionally waiting to file for loan forgiveness. Their apparent hope is that the application process will become easier as banks become more familiar with the process, or that simplified guidance will occur, said Tommy Brewer, managing director at Ziegler.
Many banks, credit unions and other private lenders who made PPP loans have been urging borrowers to adopt this wait-and-see approach, according to an article Tuesday in Newsday.
Lenders noted that borrowers aren’t facing a tight deadline and won’t incur interest charges if they wait to file applications. Proposals under review in Congress would remove the forgiveness application requirement for small businesses and nonprofits with loans less than $150,000. Senate lawmakers also have proposed that borrowers of $150,000 to $2 million no longer would have to submit payroll sheets and other documents showing how the money was spent but simply could certify that the records exist and keep them for three years.
Brewer noted that for those senior living operators that have submitted applications, it most often was because the firms needed to be able to recategorize the loans as revenue.
“For the very few that have submitted forgiveness applications, they have done so because their auditor will not allow them to recognize the PPP into revenue until the loan is forgiven,” Brewer told McKnight’s Senior Living. “This is important for some organizations that have debt ratio compliance concerns that could be mitigated or eliminated if these loans can be recognized as revenue.”
