The number of small businesses with legitimate claims that are actually obtaining funds from the Small Business Administration under the Paycheck Protection Program (PPP) appear to be few and far between, but even those who've obtained the "forgivable" loans could still be screwed in the end.
The thing is -- no one knows for sure what criteria will be used to decide which loans are forgiven. The Treasury Department is flying by the seat of their pants and the terms have actually changed multiple times over the past few weeks.
"It's a mess. Just the calculation of who counts for payroll, what counts for payroll," said Adam Markowitz, who works at a Florida accounting firm. In fact, he can rattle off a list of how the meaning of "payroll" has changed since the program was created.
"There was a point that independent contractors were going to count towards payroll costs. They no longer do. There was a point that FICA tax was going to count towards employee costs. It no longer does," he said, naming just two.
While those things are being clarified, something else hasn't: exactly how forgiveness will work — how the forgiven amount will be calculated and how the total number of employees on payroll will be counted, for example.
I feel like you don't have to be clairvoyant to see where this is going.
Just like the system to obtain loans in the first place has been gamed by the most politically and legally well-connected firms, the system for forgiving the loans will be gamed as well.
Having no firmly established rules -- and rules that are still changing -- means those with the best connections and highest paid lawyers will find it easiest to navigate the system and walk away without any debt.
Legitimate, locally-owned small businesses without such connections will probably be left on the hook for their loans while larger firms wiggle their way out. Even the next administration could find it difficult to recoup loans from businesses that didn't use the funds properly without litigation because of the flimsy rules laid out by the Treasury today.