Navigating PPP Forgiveness – It Just Got a Little Easier
Nothing about COVID and the economic fallout has been easy. Among those hit the hardest were our small businesses Despite the financial lifeboat that the Payroll Protection Program provided, some of those businesses still went under. For those that remained afloat, the struggle continues. Many businesses had to shift their business model and redesign their operations to meet the demands of the “new normal” that resulted from the pandemic. To add to the struggle, those businesses that received PPP loans are now faced with the pending deadline of applying for PPP forgiveness.
According to the SBA:
“A borrower can apply for forgiveness once all loan proceeds for which the borrower is requesting forgiveness have been used. Borrowers can apply for forgiveness any time up to the maturity date of the loan. If borrowers do not apply for forgiveness within 10 months after the last day of the covered period, then PPP loan payments are no longer deferred, and borrowers will begin making loan payments to their PPP lender.”
What is the Covered Period?
The PPP loans were intended to cover 8 weeks of payroll and other qualified expenses. These funds had to be spent within 24 weeks of receiving them. The period to apply for PPP forgiveness is within 10 months of the final day of those 24 weeks. This means for many businesses who received first draw PPP loans, the deadline to apply for forgiveness is near and for some, it has already passed.
If all the funds were not spent during the 24 weeks, the remaining funds will not be forgiven and have to be repaid. If a business does not apply for PPP forgiveness within the following 10 months, the loan will not be forgiven and regular loan payments will begin.
How to Apply for PPP Forgiveness
Previously to apply for PPP forgiveness, business owners had to go to the lender who provided the funding and bring all the required paperwork documenting when and how the funding was spent. Much like many things during COVID’s initial strike, receiving PPP funds or applying for forgiveness was a challenge. By the time the second draw PPP funds were made available, the process got a little easier. Now there is an online portal for those preparing to apply for PPP forgiveness. The portal became available on August 4, 2021.
Who Can Use the PPP Forgiveness Portal?
First, you need to make sure the lender who provided your business with PPP funds is participating in direct forgiveness. If they aren’t, you will be unable to apply for PPP forgiveness using the portal. Instead, you will have to apply through your lender using the appropriate form. It will either be SBA Form 3508, SBA Form 3508EZ, SBA Form 3508S, or a lender equivalent. Once you and your lender have chosen the proper form, they can guide you through the application process.
If your lender is participating in direct forgiveness, then the portal can be used to apply for forgiveness. Direct forgiveness borrowers are required to apply through the portal. The questions you will have to answer within the portal will correspond with the questions asked on SBA Form 3508S. You can download the list of direct forgiveness lenders here.
What You Will Need to Apply
Because the application process through the portal mirrors SBA Form 3508S, you will not need to submit your documentation. However, the SBA may conduct a loan review or audit, so it is important to have all your documentation in order. The SBA has outlined the documentation needed if not applying through the portal or should a loan review or audit be required.
Be Sure to Follow Up
After you have submitted your application for PPP forgiveness through the portal or your lender, be sure to monitor it. Should a review be required, you will be notified by the SBA or your lender. Should your application be denied, find out why, as certain SBA loan review decisions can be appealed. Once your application has been completely processed it is your lender’s responsibility to inform you of the amount of forgiveness paid by the SBA, and the initial due date should any repayment be required. For direct forgiveness borrowers, there is a dedicated call center and a direct forgiveness knowledge base for any questions regarding your PPP forgiveness application.
Need Additional Funding?
At CFG Merchant Solutions, we get it. Although the PPP loans saved many businesses from closing their doors forever, they may not be enough to acclimate your business to the “new normal”. We offer a variety of funding options to keep your business one step ahead of the competition. Contact us or apply online today!