PHILADELPHIA (KYW Newsradio) — Hundreds of thousands of small businesses have been told by federal officials that they will not be receiving paycheck protection loan forgiveness because of errors on applications.
These are known as “good faith errors” on applications for the Paycheck Protection Program.
They went unnoticed by banks and 300,000 businesses ultimately got the loans. However, when it came time to ask for forgiveness, the Small Business Administration said those businesses received too much money, and had to pay back the excess.
“They were paperwork errors … they used 1099 employees instead of W-2 employees and counted that towards their total payroll,” explained Emily Wurth, director of operations at the American Business Immigration Coalition.
Wurth has asked the SBA to fix the rule, saying it unfairly punishes small businesses that were just trying to stay open and keep people employed during the pandemic.
“It was a complicated law. It rolled out very quickly. The majority of it was good. It kept people employed, it kept businesses afloat, and some of these smallest businesses, they just didn’t have any help,” she said.
“They spent the money on keeping those individuals employed and because of the way the rules are set up, they’re not eligible for forgiveness for any of that money.”
The SBA estimates more than 300,000 businesses got an average excess loan of about $12,400. That totals nearly $4 billion, none of which will be forgiven.
“We’re going to keep fighting,” pledged Wurth. “We wish the SBA would have had the courage to respond six months ago when we sent them the letter. So we’re going to keep asking those questions. I don’t know where we’re going to get, but we’re going to keep asking those questions.”