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PPP Loan Forgiveness Should Be Top Priority for Your Business
If your business received funds under the Paycheck Protection Program (PPP), then PPP loan forgiveness should be at the top of your to-do list right now. Failing to apply for forgiveness or providing incorrect information could literally cost your company thousands of dollars.
7 ways to maximize your PPP loan forgiveness:
1. Apply on time.
The Paycheck Protection Program Flexibility Act (PPPFA--I know, these acronyms), signed on June 5, 2020, extended the timeline employers had to use their PPP funds from 8 weeks to 24 weeks. In other words, you may apply for forgiveness as early as 8 weeks after receiving your PPP money. If your company needs additional time to properly use its funds, take it. But make sure to apply for PPP loan forgiveness by the time your 24-week period is up.
The requirements around PPP loan forgiveness have shifted recently and may differ from the requirements in place when you received your loan. For example, the PPPFA amended the percentage of PPP funds that must be used for payroll: it’s now 60% instead of 75%. The instructions that accompany the application provide a lot of additional detail.
3. Keep the right records.
You’re required to submit certain documentation for PPP loan forgiveness: bank statements, payroll reports, tax records, utility bills, etc. Your business also needs to keep other documentation on file. We recommend that you take the “don’t submit but keep on file” requirement seriously, as the government has the right to request those records during an audit.
You should communicate regularly with a CPA or attorney about how to use your PPP funds and how to apply for forgiveness. Any questions that arise should go to this trusted individual first. You should also touch base with a representative at your bank, since the bank will receive your application and make the final determination on loan forgiveness.
6. Don’t be too creative.
We love outside the box thinking--but not when it comes to government loan money. Try to follow the letter of the law when it comes to PPP fund usage and forgiveness. The relaxed requirements should make it easier for you to obtain forgiveness without overly “creative” solutions.
7. Discuss in your EOS sessions and meetings.
PPP loan forgiveness shouldn’t be hard, but you’ve still got to track, plan, and execute successfully to get there. Make loan forgiveness a Quarterly Rock or 30-day Next Step, an Issue for L10 meetings--weave it into the EOS structure so you have enough accountability to cross the finish line.
If you need any help with PPP loan forgiveness, contact firstname.lastname@example.org. We’ll connect you to one of our finance team members and get you the support you need.