Think the FAQs Released by the SBA and IRS give the definitive answer on how the PPP loans are to be made, used and forgiven? Think again. According the SBA’s Inspector General report the SBA has failed to follow guidelines on PPP loans included in the law.

In a report released May 8th the SBA’s Office of Inspector General (OIG), led by Inspector General Hannibal Ware, told Congressional leaders that the agency failed to follow several congressional mandates in implementing the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

The report stated that borrowers “including rural, minority and women-owned businesses may not have received the loans as intended” even though Congress had specifically required the SBA to give clear guidance to lenders about under-served and rural markets. It also found that the rules issued by the SBA requiring borrowers to use 75% of the PPP funding on payroll costs in order to qualify to receive full forgiveness of their loan were not consistent with the law, as the Cares Act didn’t mandate any specific amount be dedicated for payroll expenses. According to the National Society of Accountants many members have heard from their clients that the 75% requirement created a hardship as their businesses were not yet in operation or only in limited operation and they really needed the loans to enable them to pay rent, utilities and other ongoing expenses that were due regardless of the fact that they operations were limited by government action.

As we draft this article, the SBA has yet to comment on the report’s findings, however, the report does include a statement on the original intent of the SBA regarding the 75/25 Rule; the agency said it did so “in light of the act’s overarching focus on keeping workers paid and employed.”

Click here to read the full SBA Inspector General’s Report

Do you have an SBA 7(a) or 504 loan?

The CARES Act gives debt relief to business with 7(a) and 504 SBA loans. The Small Business Administration will automatically pay the principal, interest, and fees on these loans for a period of six months.  This relief also applies to new 7(a), 504, and microloans issued prior to September 27, 2020. To get this relief you do not need to take action unless according to the SBA website you have preauthorized and recurring payments (auto debits or ach payment through your bank) as the SBA says these payments will not be automatically canceled and will be applied to your loan in lieu of the debt forgiveness offered under the CARES act. To get the debt relief you will need to cancel any preauthorized payment of debts. For additional information see the SBA’s website at