Applying for a PPP loan was one thing, but getting all or some of it forgiven requires a separate application process.  Even though SBA posted an application on their website some time ago, it was really just to give borrowers a head start on what information would be needed when applying to their lenders for forgiveness.  Lenders are still waiting on SBA for guidance and procedures to process those applications, so few if any are accepting applications at this time.

Loan forgiveness depends on two elements: using the loan proceeds for “forgivable” expenses, and how employee count and pay is maintained or restored.  Not only can these calculations be complex in and of themselves, but there are numerous alternatives and strategies available to ensure maximum forgiveness.  It appears many payroll companies are going to provide specialized reports to help with the employee data needed for these calculations.  However, they may or may not help guide employers to the optimum “sweet spot” convergence of employee count/pay, covered expenses and choice of covered period.  Except for the simplest cases where you spent the whole loan on payroll and maintained employee count and pay, you would be well advised to get some knowledgeable help with your application.

Having said that, the Senate version of the stimulus package currently being debated (or not?), provides an easier pathway to forgiveness for loans under $2 million, and especially under $150,000.  Basically, all that would be required under the proposal is your signature certifying you complied with all requirements for the loan to be entirely forgiven.  Whether the bill will pass, or what changes might be made before it does, remains to be seen.

To request forgiveness of PPP loans, borrowers generally have ten months from the end of their “covered period” which can be as long as 24 weeks from the date of their original loan.  Understandably, many borrowers want closure on these loans, but with so many questions still in flux, there really is no rush to apply for forgiveness (even if you could).

If your PPP loan was under $150,000, we recommend sitting tight until the forgiveness process is finalized so you don’t spend unnecessary time figuring out complex calculations… when it’s all said and done, you might not need to spend much time at all.

If your PPP loan was over $150,000, you’ll still need documentation to support loan forgiveness, either to submit with the application itself or to have it on hand in case of an audit.  Even though the process isn’t finalized yet, it would be a good idea to start considering the alternative ways you can measure employee count and pay, and how you used the loan funds, to determine maximum forgiveness.  If you would like some help figuring it all out, give us a call!