Whether or not you have accurately spent your Payment Protection Program loan funds will determine if your loan qualifies for partial or full forgiveness. As a small business owner, you are trying to figure out exactly how you can get your entire amount forgiven. We’ve come up with some tips and steps for you to take to seek forgiveness for your PPP loan.

Use the Funds for Eligible Expenses

Have you been tracking your spend? Your PPP loan can only be forgiven in its entirety if you spend the funds on eligible expenses. Eligible expenses include: payroll, utilities, rent and mortgage expenses, commissions, employee benefits etc. Eligible expenses are those that incurred after the first payment was dispersed by your lender. 75% of the funds must have been spent on payroll cost. While the remaining 25% can be spent on non-payroll costs such as; interest on mortgages, rent and utilities dated before February 15, 2020. Payments to independent contractors are not included in payroll costs.

Documentation is Key

Having your documentation is crucial to seeking forgiveness for your PPP loan. Your lender might have additional requirements regarding documentation but for the most part you should be documenting: number of full-time employees, pay rates, payroll reports, tax filings, rent or utility payments. Also document the dates where you received funds from the loan, each time you spent loan funds and interest.

Maintain Staffing

The purpose of the Payment Protect Program was to keep your employees working during this time of uncertainty. When you apply for loan forgiveness, your number of employees will be included in the equation. The CARES Act will consider the average of full-time equivalent employees you kept on payroll during the covered period. The SBA will reduce you PPP loan forgiveness based on the average of full-time equivalent employee reduction.

Speak to Your Banker

During this pandemic, it has been vital to maintain your relationship with your banker. Take the time to talk with your lender and discuss the requirements for seeking forgiveness for your PPP loan. Be sure to ask for certain what documentation you will need to present when applying for loan forgiveness. 

Apply for PPP Loan Forgiveness

The SBA recently released the Loan Forgiveness Application. You fill out the application and submit it to your lender. When submitting your application, you must provide the required documentation. As stated above your lender may require additional document but per the SBA guidelines you are required to submit; payroll reports, pay rates, payroll tax filings, receipts, rent or mortgage agreements, bank statements and bookkeeping records.

As a small business owner, it is important to utilize your resources and build and leverage your relationships. If you don’t have a banker or was unable to secure PPP funding for your business Contact us. We want to help connect you to the resources you may need.

For more information regarding seeking forgives for your PPP loan, please visit the SBA website. To follow changes and updates, please visit the Treasury website.