7 Ways to Make the PPP Forgiveness Application Process Easier

Congratulations on getting your Paycheck Protection Program (PPP) loan. We know that you put it to good use in your business and hope you’ve been able to keep the doors to your business open. As you already know, PPP is a loan, not a grant. However, there are ways you can get that loan forgiven and won’t owe a cent. Here are seven ways to make the PPP forgiveness application easy and get you ready for audit.

1. Review and Confirm Owner’s Compenation Caps

As you know, PPP can be used for personal compensation. You’re allowed to allocate 2.5 months’ worth of net profits to personal compensation, you can use that money anyway you’d like. However, there are some things to bear in mind. 

• There is a certain period you have to spend your funds, which is from 8-24 weeks.
• There is a cap that you can use for your salary or owners compensation, regardless of how you much you usually pay yourself.
• For 8 weeks the cap is $15835.
• For 24 weeks the cap is $20833.
• If you go over the cap, then amount you exceeded the cap by would not be forgiven. 

2. Review Payroll Expenses, Caps and Exclusions

Remember that 60% of the funds you received must be spent on payroll-related costs. Your non-payroll related of course should be spent on business-related expenses. 

Some business-related (non-payroll) expenses, according to the Small Business Administration (SBA) are:

• Covered operations expenditures
• Business mortgage interest payments
• Covered property damage costs
• Business rent or lease payments
• Business utility payments
• Covered supplier costs
• Covered worker protection expenditures

In order to get loan forgiveness, you will have to make sure that money was allocated in the way that it was supposed to. Otherwise, you’ll have to repay the loan. 

As you can see, being on top of your bookkeeping is important when applying for loans and when seeking forgiveness. We recommend Quickbooks for your bookkeeping needs. 

3. Ask Your Bank if They are Ready to Take Forgiveness Applications

Not all lenders are ready. Make sure that you check with your lender to see if they’re ready to receive your forgiveness applications. 

If they’re not ready, ask them when they will be. In addition to that, find out where to submit your application. Most lenders will have a dedicated page with information for forgiveness. They’ll likely have vital information there. 

4. Make Sure You are Done With Your Covered Period

According to Quickbooks, the loan forgiveness covered period is the amount of time you have to use your loan if you want to qualify for forgiveness. Whatever your covered period was whether 8 or 24 weeks, make sure you use the money during that time. You’ll need to have information about when you got the funds, disbursed the funds, and used the funds. 

If you haven’t used your funds, don’t submit a PPP forgiveness application. Submitting an application means that you could get denied or have your forgiveness amount reduced. 

5. Identify Which Application You Can Use

If you were funded $150,000 or less, then the 3508S form is your go-to form. This is the form most people will have to fill out.

 However, if your business is contracted to or affiliated with other businesses that got PPP loans which totaled over 2 million dollars, you’ll need to use another form. 

If you received more than $150,000 then you’ll need the 3508EZ form or the 3508 . The links will carry you directly to these forms so you can see which ones are the correct ones to fill out. 

6. Create a Draft Application Before You Get Online

Creating a draft application will save you time in the long run. Make sure you have the information you’re going to need to enter in the form. Go to your lender portal, the SBA website or click the links above to access the forms. You can take the time to populate the form and get your answers ready. That way, when your lender does open up the portal, you’ll be ready.  

7. Use a Digital “Audit File”

Use Google Drive or another organizational tool to make sure you have your documents ready when needed. Save everything in a folder that is easily accessible when needed. You’ll know what documents you’ll need based on the form. Once you know what you’ll need, start saving the files to your folder so that when you’re applying or getting audited, you’ll be prepared. 

Having all of your documents could save the day. For example, maybe you’ll only qualify for partial forgiveness but that’s due to an error. If you have your documents, you can show that the organization made a mistake and get what you deserve. 

Conclusion

We hope that this list will help you be more prepared for PPP Loan Forgiveness application. Don’t forget to share this blog post with an entrepreneur so that they can get prepared too. 

N.B The SBA mentioned that they’ll be opening their Paycheck Protection Program Direct Forgiveness Portal on August 4th. This portal will facilitate and streamline applications for loans $150,000 or less. 

If you’re more of a visual person, you can check out the YouTube video we did on this topic.