Your PPP Loan: How Do You Apply For Forgiveness?

The PPP loan, for most, has already come and gone — though the second stimulus might very well open it up again. But one of the most appealing aspects of the PPP loan was the fact that it could be forgiven. As long as businesses used a certain amount of the funds towards essential things such as labor costs, they would be able to get the loan paid off by the government. Unfortunately, since the PPP loan packages were passed so quickly, there’s been very little guidance, and even most lenders have been left adrift.

Here’s what you need to know.

LENDERS ARE AS MYSTIFIED AS YOU ARE

Lenders have not yet received comprehensive directions regarding the processing of forgiveness applications. This isn’t a good thing; the original deadline for even applying for forgiveness used to be mid-July. It’s since been extended, but the fact remains: there is a time limit for filing for forgiveness and it has changed before.

Because there’s no set path towards filing forgiveness, borrowers need to connect with their lenders directly. Lenders will give borrowers a list of documents and start preparing their paperwork, but it’s possible the lenders won’t be able to actually file this paperwork until the government gives them additional guidance.

THE RULES FOR FORGIVENESS

The rules of forgiveness for the PPP loan have changed. But luckily, they’ve changed to be more forgiving, rather than less. First payroll costs can be forgiven up to $15,835 per individual over an eight week period, or up to $46,154 per individual if a 24 week maximum period is chosen instead. But it should also be noted forgiveness does differ depending on the type of entity. Sole proprietors have different requirements from LLCs.

It’s likely that organizations are going to need to show how their funds have been spent if they’re going to apply for forgiveness. While the exact ins and outs of applying for forgiveness may be questionable, organizations should already start getting their documents together and sending them in to their lender. Only then will their lender be able to start processing documents on their end.

SUBMITTING FORGIVENESS DOCUMENTS

So, because of the way that everything has panned out, organizations can fill out their forgiveness forms — but will need to wait until their lender is ready to process them. Because every lender is different, every lender is also going to have a different way of processing these documents. In addition to the documents themselves, organizations should get together:
  • Their monthly account statements.
  • Their monthly accounting reports.
  • Their monthly payroll stubs or payroll reports.
These should be enough for an organization to produce a forgiveness document, but there’s no guarantee that this document will be accepted. However, it should be noted that lenders have a vested interest in getting the loans forgiven as well, as this means they get paid back with certainty.

The PPP loan has been a little questionable from the start, because there has been so little guidance for lenders. Many lenders started processing the PPP loans themselves even before they were certain what the requirements would be. Unfortunately, those who have already acquired a PPP loan may be left somewhat adrift until lenders come forward with their forgiveness requirements. Organizations that are waiting to get their loans forgiven should inquire with their lenders as soon as possible.