The SBA Paycheck Protection Program (PPP) offered a financial lifeline during uncertain times. However, as we shift from application to forgiveness, some business owners are facing challenges with non-forgiven loans and ensuing collections. John Milikowsky, founder of Milikowsky Tax Law, addresses this pressing issue in his new video, “SBA PPP Loan Defaults: How to resolve collections by the US Treasury,” providing valuable guidance for those receiving collection letters from agencies like TSI or Pioneer.
- Understanding Collection Notices: If you’ve received a notice, it likely means your forgiveness application was denied, possibly without your knowledge due to communication mishaps with banks.
- Importance of Immediate Action: Swift communication with the collection agency is crucial. Indicate your intent to resolve the issue and be prepared to submit a dispute letter with substantial documentation.
- Clarifying Forgiveness Calculations: Forgiveness eligibility depends on two factors – the justification of the loan amount based on initial payroll calculations and the actual expenditure of the loan, with at least 60% on payroll.
- Expert Legal Assistance: Engaging with a seasoned tax attorney can be pivotal. They can help you understand the denial’s reasons, aid in submitting a well-founded dispute letter, and navigate the complexities of potential aggressive collection actions.
Dealing with collections for an SBA PPP loan can be daunting. The process has several layers, from understanding why your loan wasn’t forgiven to responding appropriately to collection actions. Here’s what you should know:
Loan Forgiveness Denial and Its Implications:
Your PPP loan forgiveness might have been denied for several reasons, such as discrepancies in payroll records or failure to meet the required income reduction for a second PPP loan. It’s essential to pinpoint the exact reason for denial to address it effectively.
Strategic Response to Collection Agencies:
Once you receive a collection notice, it’s imperative to contact the assigned representative immediately. The goal is to convey your willingness to resolve the matter and explore the possibility of loan forgiveness, which will involve presenting a thorough dispute letter with evidence supporting your case.
The Dual Analysis for Loan Forgiveness:
Understanding the criteria for loan forgiveness is crucial. It involves looking back at your initial loan qualification based on payroll and then examining how the funds were allocated, ensuring the majority was used for payroll expenses.
The Role of Professional Guidance:
An experienced tax attorney can offer significant advantages. They can review the nuances of your case, determine all reasons for loan denial, and assist in compiling a comprehensive dispute letter. This expert intervention can be the difference between continued collections and achieving loan forgiveness.
If you’re facing collections for an SBA PPP loan, it’s a situation that requires immediate and informed action. Remember, you don’t have to navigate this alone. For further assistance and to discuss your specific case, contact Milikowsky Tax Law.