So your business received PPP funding and you meet all the qualifications of forgiveness… What happens next? At the end of the covered period, you will need to work closely with your lender to begin the forgiveness process. Although your lender should be experienced and prepared to walk you through the process and although regulations are still in flux, this article is meant to give businesses an idea of what to expect when it comes time to apply for loan forgiveness.

  • Have your documents ready. Businesses should be prepared to provide their payroll information, Full Time Equivalency (“FTE”) employee documentation, and proof that nonpayroll obligations existed prior to February 15, 2020.
    • Payroll information. This includes: (1) bank account statements or payroll service reports that document all your cash compensation paid to your employees, (2) your tax documents, including payroll tax filings and state wage reporting, and (3) documents that show what your business has contributed to health insurance and retirement plans.
    • FTE documentation. Be prepared to demonstrate that you have maintained the same number of FTE (full-time employees) employees during the covered period. Although you can restore your employee headcount by December 31, 2020 and qualify for safe harbor exceptions, be prepared to submit documents to this effect or risk having your forgiveness reduced. The same documents that you submitted as payroll information can be used here.
    • Nonpayroll obligations. If you are using part of your PPP funding on nonpayroll obligations, you will need to demonstrate that these obligations were in effect before February 15, 2020. This means submitting proof of mortgage, proof of lease, and proof of utilities from February 2020 onward through your covered period.
  • Work closely with your lender. Because many lenders already anticipate selling their PPP loans on the secondary market, there is a very real possibility that you will need to work with multiple parties to complete the forgiveness process. And with each entity involved, they may have their own documentation requirements that exceed SBA guidelines. Further, very few businesses have begun undertaking the forgiveness process, and the SBA may announce new requirements and regulations when it comes time to apply for forgiveness, and it will be important to communicate with your lender to ensure there are no surprises.
  • Keep Copies of Whatever You Give Your Lender!  Consider using Dropbox or scanning and retaining records.
  • Paychecks Services Are a Big Help! If you utilize either Paychex or ADP for payroll, both services are now working on software programs to have you identify and categorize expenses for PPP forgiveness purposes; you can then simply download the documents and email them to your lender.

NOTE: The rules continue to change. Your first questions should be to your accountant – s/he should be able to handle the answers. In any event, we will keep you apprised of these changes from time-to-time. RWeiss 06/11/2020.