Our Guide To PPP Loan Forgiveness
Millions of small business owners who took out Paycheck Protection Program loans are now eligible for loan forgiveness.
Despite the uncertainty, delays, and problems experienced by many small company owners in obtaining a Paycheck Protection Program loan, having the debt forgiven may prove to be surprisingly, refreshingly simple.
Borrowers with loans in the range of $150,000 or less are exempt from having to demonstrate receipts. Most of the time, all you have to do is tick a box confirming that you met the PPP requirements for payroll costs and eligible expenses. (For second-draw loans, you must also show a qualifying revenue loss.)
This is where the great majority of PPP debtors fall. 95% of the almost 6.7 million PPP loans provided in 2021 were for less than $150,000. In 2020, 87 percent of all PPP loans will be for less than $150,000.
While you have no control over the amount of your loan — that is determined by a formula established by the US Small Business Administration — you can have power over other aspects that make loan forgiveness simpler.
Relationships are important.
John Sims got his PPP loan through Chase, where he also has a business checking account and knows his business banker by first name (he was even in a book club with one of his bankers).
When he applied for his loan and for forgiveness, that relationship made all the difference. Despite just qualifying for a few thousand dollars at a time when Chase was granting PPP loans of more than $100,000 on average, he had his banker’s ear.
Keep a COVID file
Jill Peters began a COVID-19 file to store all relevant information when the pandemic shut down her studio.
She explains, “I have an MFA in ceramics; I’m not a very business-minded person when it comes to keeping track of those tiny bits and stuff.” “Having everything in one area was quite beneficial to me because I was able to quickly locate items without having to go through different locations.”
Peters followed suit, putting together separate files (both digital and paper) with copies and scans to show how her PPP loan was used. Because of the simpler application, she didn’t have to supply those records for her loan forgiveness, but she has them on hand in case the loan is audited.
Do you have any questions? Rely on professionals.
Turn to professionals — your accountant, your lender, and the SBA — rather than internet armchair experts, as questions emerge.
There’s a lot of information out there, and things get shared around on social media like it’s a phone call,” Peters adds. “It’s helpful to know exactly what’s going on versus some third-party account on Twitter.”
Are you unsure about the terms of forgiveness or dealing with a non-responsive lender? The SBA offers webinars and counselors to assist with all PPP-related issues.
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