PPP Loan Forgiveness In The Mortgage Field Services Industry

Is LoanBuilder's Software Not Up To The Task?

With nearly 100,000 contractors in the Mortgage Field Services Industry, chances are that 80% or more have applied for the Payroll Protection Program (PPP). PPP was designed as a program to get cash infusion to firms with 500 employees or less during the COVID Crisis. Additionally, Congress made these funds available to sole proprietors. PPP loans were designed to keep employees working and small businesses open. Two acts actually brought PPP forward. The first act was the Coronavirus Aid, Relief, and Economic Security (CARES) Act which, in essence, was a failure as it rolled out with respect to PPP loans. Additionally, the CARES Act limited the timeline to exhaust the funds at eight weeks and also only allowed 25% of the funds to be utilized for non payroll uses. The second act, the Paycheck Protection Program Flexibility (PPPF) Act extended from eight weeks to twenty four weeks timelines for using the funds while additionally allowing for up to 40% of the money to be used for non payroll expenses. PPPF allowed applications submitted before 05 June 2020 to inherit the additional benefits of PPPF. Any PPP loans taken after 05 June 2020 were given 24 weeks, or until 31 December 2020, whichever one was less, to request loan forgiveness or pay it off.

Foreclosurepedia utilized LoanBuilder, a PayPal company, as its financial channel. The process was fairly simple; however, as it was during the first round of PPP, it took a substantial amount of time before we were approved. Asking questions within the platform go unanswered and the only viable way of obtaining answers is via telephone.

With respect to sole proprietors, PPPF is of great importance. Above and beyond the extension of timelines as well as the amount of the loan which may be applied to non payroll expenses, there is a provision known as Owner Compensation Replacement (OCR). According to Bench, OCR states, in essence, the following:

The amount of Owner Compensation Replacement you’re eligible to claim for forgiveness is calculated by multiplying your reported net income in 2019 on your Schedule C by 2.5/12 (or 0.208). This is essentially your entire PPP loan, assuming your loan amount did not factor in additional payroll expenses.

It looks good on paper, but the problem is that nothing is ever as it seems. When we went to LoanBuilder, we noticed something odd. Interest had begun accruing. Interest? Wait, I thought I had 24 weeks to apply for forgiveness? We had applied on 01 May 2020 — under the CARES Act — but were retroactively grandfathered into the PPPF. Moreover, though, LoanBuilder had begun applying interest, every month, since 01 July 2020. And the ironic thing is that on Loan Page, it spells out specifically that we were eligible for a 24 week loan period! Additionally, the ability to comply with Line 7, which demands you enter only 60% of payroll expenses and then apply that number — as we deducted no rent, power, or mortgage — would force a payment of roughly 40% of the loan back to the Small Business Administration (SBA).

Phone calls to LoanBuilder advised that they have no access to PPP Loan information over the weekend. Phone calls to SBA, answered at home with children in the background by English as a Second Language speakers — stated SBA was not allowed to instruct on how to fill out the SBA 3508EZ form which necessary to apply for PPP loan forgiveness.

I believe that keeping tabs on PPP is important for far more reasons than simply what I may or may not own. For months, there have been discussions to relieve those with PPP loans under $150K outright — a simple stroke of the magic pen.The problem here is that there very well may be a high propensity to keep the $100 or so interest on small firms and pass it through to the US Government. While singularly it is not much, when added to tens of millions of firms, that money adds up quickly. I also am concerned from simply the technological point-of-view. For all the smoke and mirrors we push about going to the Moon and Mars, one would think a simple if then programming statement could be added to the PHP code.

I’ll update the article when I have an answer from LoanBuilder — of which I am not holding my breath!

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