When business owners applied for PPP funds earlier this year, the process was complicated and the rules changed rapidly. When the program was announced, it wasn’t yet entirely clear how business owners would go about applying to get those loans forgiven. Now, we know much more about the process and rules, as summarized below.
The Small Business Administration has released guidelines regarding loan forgiveness applications, and their platform for applications is expected to open August 10. This platform is for lenders, not borrowers — borrowers must work through their lenders to submit the proper documentation to SBA for loan forgiveness. While the SBA portal opens August 10, we do not expect lenders to immediately be ready to accept applications. Timing is expected to vary by lender; however, we still recommend reaching out to your lending bank and inquiring when their application will be available, and ask what information you should begin gathering.
It’s important to note that the entire loan may not be eligible for forgiveness, depending on how you spent the funds. Roughly, the forgivable amount is based on the number of employees retained or rehired and the percentage of their salary that you paid them. Here’s a handy calculator for seeing how much your forgivable amount can be expected to be.
To get a PPP loan forgiven, the borrower must complete and submit the loan forgiveness application to the lender. This can be done before the covered period (8 or 24 weeks) is over, if the borrower has used all the funds from that loan.
In June, Congress passed the Paycheck Protection Program Flexibility Act of 2020, which extended the covered period from the original eight weeks to 24 weeks (or until December 31, 2020, whichever is shorter). The covered period begins the first date the borrower received a payment from the lender, not the date the application was submitted.
If you have yet to submit an application for a PPP loan, but you are still interested in exploring whether it might benefit your business, there are still funds available, and the deadline has been extended to August 8.
While your lender will be your main point of contact for this process, we at SBF are here for you to provide assistance as needed. If you feel our services are needed to assist with your forgiveness application, you can reach us at info@sbfcpa.com.