Maximize PPP Loan Forgiveness

Maximize SBA Loan Forgiveness

The organizational impact of COVID-19 has given way to a variety of relief provisions. These relief provisions are designed to help keep employees on payroll, maintain operations and keep the doors open in the wake of the pandemic.

One of the most popular options for relief provision funding is the Paycheck Protection Program (PPP). Paycheck Protection Program loans are available to assist organizations in maintaining a workforce during the COVID-19 pandemic. While initially structured as a loan from an SBA approved lender, a recipient can take steps to achieve potential or total forgiveness of the PPP loan. A key provision for the PPP loan forgiveness is that the majority of the funding (60 percent) must be used for eligible payroll costs.

Maximize Your Loan Forgiveness Now

Steps to Maximize Loan Forgiveness
While many organizations may qualify for some level of forgiveness through the PPP loan program, good planning and proper documentation can help ensure you maximize your loan forgiveness potential.

Key steps include:

  1. Remembering what expenses are covered under the Paycheck Protection Program. Eligible expenses include payroll, mortgage interest (as long as it was signed before February 15, 2020), business rent or lease payments (as long as it was put into effect before February 15, 2020) and utilities (as long as the service began before February 15, 2020).
  2. Understanding the impact of payroll. At least 60 percent of loan proceeds must be used to fund payroll costs. Failure to meet the 60 percent threshold results in a reduction in the forgiveness amount of the PPP loan.

    The PPP loan forgiveness amount can also be reduced if you do not maintain the average number of full-time equivalent employees during the covered period or if you reduce salaries of specific employees during the covered period.
  3. Tracking expenditures. Eligible expenses have to be tracked over the eight-week covered period, starting with the first payment made by your SBA approved lender. These expenditures may give rise to partial or complete forgiveness.

    An important note here is that eligible nonpayroll costs under PPP loans can be paid during the covered period or incurred during the covered period and later paid on or before the next regular billing date, even if that date falls outside of the 24 week covered period (unless you choose the original 8-week covered period).
  4. Apply for forgiveness. The PPP loan forgiveness application has been issued and requires a documentation list that a borrower must submit to their lender. These include:
  • Bank account statements
  • Tax forms
  • Reciepts
  • Average FTE counts
  • Documents that verify non-payroll expenses

PPP loan forgiveness will be complex.

With more guidance issued related to PPP forgiveness criteria, it’s important to understand how to get the most return.

Tools and Resources to Help You with PPP Loan Forgiveness

While one of the most popular relief programs, the PPP has also caused substantial confusion as guidance on both eligibility and forgiveness continues to be issued. We have developed tools and resources to help organizations understand this guidance and how it impacts them and their PPP funding.

July 7, 2020
Borrowers may begin the forgiveness process as soon as they have paid and/or incurred enough eligible expenditures, but there are still a few things they’ll need to account for.
June 18, 2020
On June 17, 2020 the government released an updated Paycheck Protection Program (PPP) loan forgiveness application form along with a new simplified application form for certain borrowers.
June 9, 2020
Recorded Webinar
Congress just passed legislation introducing material changes to the Paycheck Protection Program (PPP). These changes are likely to affect all PPP borrowers. We recently discussed these important changes with Jaime Wood, District Director for the …
June 4, 2020
New legislation for the Paycheck Protection Program bring some welcome changes that may make it easier for borrowers to achieve loan forgiveness. Here is what’s changed.
May 18, 2020
Many Paycheck Protection Program (PPP) loan borrowers are more than halfway through their eight-week forgiveness period (the “covered period,” beginning on the date of loan disbursement) yet there are still many unanswered questions concerning how a …
May 14, 2020
Guidelines for the Paycheck Protection Program have been muddy, to say the least. A new update offers some clarity and a new safe harbor for loans under $2 million.
May 1, 2020
The IRS has recently announced that the qualified expenditures resulting in PPP loan forgiveness are not tax deductible. This is a surprising development reducing the tax benefits associated with PPP loan forgiveness.
April 28, 2020
As loans are funded under the Paycheck Protection Program, many organizations are making plans to move forward. However, there are still important planning considerations all borrowers should focus on. These additional items will help you maximize the amount of loan forgiveness you receive.
April 7, 2020
The Small Business Administration (SBA) has launched a large loan and relief effort in light of COVID-19. The following highlights some of the benefits available to small businesses.
April 28, 2020
There is no specific accounting guidance on how to record government assistance such as grants or loan forgiveness for organizations taking advantage of the PPP, but there is some general guidance available. Here are some common questions and …
April 24, 2020
After some backlash, the government has offered more guidance on what makes a PPP loan “necessary” for a business and payback terms for those who don’t qualify. However, it may have just muddied the waters.
April 21, 2020
Recorded Webinar
The Paycheck Protection Program has been a source of relief and confusion for many organizations as they grapple with the effects of the COVID-19 pandemic.
April 3, 2020
Recorded Webinar
Relief provisions are in play for organizations and individuals alike in response to the COVID-19 pandemic. But there is still a lot of confusion around what exactly these relief provisions mean and what type of relief organizations should apply …

Weekly PPP Update

PPP loan forgiveness continues to be a constant topic of discussion among borrowers, lenders and business advisors alike. Guidance continues to be issued regarding PPP forgiveness and eligibility. Eide Bailly’s Adam Sweet has been monitoring the PPP and will provide weekly updates on what to do and what to expect.

Have questions?