If you filed for and received a Paycheck Protection Program Loan (PPP Loan), filing for forgiveness for those funds is vital. And you must do so before time runs out.
The Paycheck Protection Program, first introduced in March 2020 through the CARES Act, helped businesses keep their workforce employed during the COVID-19 crisis. Any business that received the funds were required to spend it on eligible expenses as well as maintain employee count and compensation during the covered period. Assuming a business followed the guidelines, they would be eligible for forgiveness of the loan. It is important to know the PPP loan forgiveness is not automatic and an application requesting forgiveness must be filed with the lender that the loan was processed by.
Once all of the borrowed funds have been used, it is time to act regarding filing for loan forgiveness. Yes, PPP loans have maturity dates, but keep in mind that the Small Business Administration (SBA) states they need a 90-day turn around to approve applications for forgiveness. While it may not take that long, you won’t want to chance it. Also, keep in mind- the larger the loan, the longer the turnaround time for approval might be. Regardless, keep in mind, that maturity date of the loan is not the end all, be all when it comes to forgiveness. You must keep this turnaround time in mind.
Timing is of the utmost importance here so you can avoid loan forgiveness being denied. Missing your filing window could result in loan payments leaving the deferment territory and entering the territory where you will be asked to start making repayments to the lender that gave you the PPP loan in the first place. Should you miss your window to file for forgiveness, invoices for return payments on the loan will start coming your way ten months following the end of the 24-week covered period.
If you have yet to start your PPP loan forgiveness process, we urge you to put the wheels in motion. You will need various types of documentation at your disposal in order to submit a full forgiveness application. Every PPP loan lender will have different required documents, so get in contact with your lender early so you can begin to gather everything that is needed. Common documentation requested by lenders includes payroll detail reports, quarterly Form 941 and state unemployment payroll tax returns, and copies of payment receipts and/or cancelled checks for non-payroll costs. Most lenders will have you take care of your application through an online forgiveness portal.
If you need assistance compiling your loan forgiveness documentation and/or filing the application, please contact our offices.