The deadline to apply for forgiveness for Round 1 of your Paycheck Protection Program loan may be around the corner. Make sure you are familiar with the specifics when applying. Here are a few tips we wanted to share with you to maximize forgiveness:
- Remember: You can apply for forgiveness at any time up to the maturity date of the loan once you have used all the funds. But please remember you must apply within 10 months after the last day of your covered period. At this point, PPP loan payments are no longer deferred, and you will have to begin making loan payments to your PPP lender.
- Reach out to your lender for the forgiveness application. While you can obtain the form corresponding to your loan amount/circumstances online from the U.S. Small Business Administration (SBA) or U.S. Department of Treasury, most lenders have developed an online version to facilitate the process. Your lender can provide you with guidance on how to submit your application through their system.
- You must apply for forgiveness for Round 1 PPP before or at the same time you apply for forgiveness for Round 2. If you did not submit paperwork documenting your 25% income decline together with your Round 2 PPP loan application, you will be asked to do so at the time you apply for forgiveness.
- Gather all documents demonstrating your use of funds for eligible payroll and non-payroll costs; you will use them to calculate your forgiveness amount. Depending on your loan size, you may not be required to submit all documents when you apply for forgiveness, but you must retain them for six years in case your lender or SBA requests them.
- Please note that if you received a PPP loan amount higher than what you were eligible to obtain due to a good-faith mistake on your part or the lender’s, you will have to repay the excess amount under the loan terms. Common mistakes include adding independent contractors to your payroll calculation or failing to cap salaries at $100,000.
Please reach out for assistance if you have questions or would like support with your forgiveness application.