What I Need to Know BEFORE Filing for PPP Forgiveness

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Regardless of our individual situations, I think we can all agree that 2020 proved to be a remarkable year! Now that we’re in 2021, we begin to turn our attention to 2020’s impact on this year. For many of us, that might include applying for forgiveness on the PPP loans we obtained.

If you haven’t already applied for forgiveness, here are a couple of items you should consider before completing your application:

  • Forgiveness of PPP loans has been simplified – It’s good news if you borrowed $150,000 or less. From the guidance provided so far, it appears that the application for forgiveness is almost automatic. It’s NOT automatic, but the process for applying definitely gives the impression that nearly all of these loans will be forgiven, provided you meet the criteria for forgiveness.
  • The definition of “forgivable” expenses has been expanded – Forgivable expenses originally only included payroll (and related) expenses and all rent and mortgage interest. To receive full forgiveness, consistent with the original guidelines, at least 60% of the forgivable expenses must still relate to payroll. The original definitions of the non-payroll expenses still apply and have been expanded. These new definitions apply to loans made before, on, or after the date of enactment, including the forgiveness of the loan  to include the following:
    • Worker protection expenditures (such as personal protective equipment) incurred to help comply with federal health and safety guidelines (as well as any equivalent State and local guidance) related to COVID-19 between March 1, 2020 and the end of the national emergency declaration.
    • Costs associated with property damage (not covered by insurance) such as those related to public disturbances that occurred during 2020.
    • Operating expenditures such as payment for software, cloud computing, and other human resources and accounting needs.
    • Supplier costs pursuant to a contract, purchase order, or order for goods in effect prior to taking out the loan for items essential to the recipient’s operations when the expenditure was made.  Costs for perishable goods can be included whether made before or during the life of the loan.
  • Check directly with your lender – Treasury has made the forgiveness application forms available to download. While the ultimate decision to forgive the loans rests with the Treasury Department, each lender is required to process its own forgiveness applications. Accordingly, each lender has its own way of doing things so you should consult directly with your lender to understand their requirements.

As always, our team is available to help you navigate these uncharted waters. Let us help! Contact us today to schedule a consultation.