ValueXpress helped many of its clients obtain first- and second-draw Paycheck Protection Program (PPP) loans. These loans were a lifesaver in many instances. Now that business is returning to normal, getting these loans officially forgiven has taken a back seat for many borrowers. But if borrowers do not apply for forgiveness within 10 months after the last day of the period covered by the PPP loan, then loan payments are no longer deferred and borrowers will be required to make loan payments to their PPP lender.
PPP round-one forgiveness was relatively easy. Most borrowers could self-certify that they complied with the SBA requirements for forgiveness. No documentation was required to self-certify. PPP round-two forgiveness remains relatively easy for PPP loans under $150,000. Those borrowers can continue to self-certify using SBA PPP Loan Forgiveness Form 3508S with no supporting documentation.
The challenge is for PPP second-draw borrowers that obtained loans of more than $150,000. These borrowers need to show supporting documentation to support full forgiveness of the loan. Borrowers need to calculate “covered periods,” reduce compensation for employees who earned over $100,000, calculate “full-time equivalents” for part-time employees and myriad of other compensation calculations for the covered period. Many payroll providers can provide the required reports, but you need to know what you are asking for.
ValueXpress has helped its clients for loans over $150,000 navigate the forgiveness process. It’s a burdensome process, but you must do it. Otherwise? Don’t be surprised when your PPP lender sends you your payment coupon in the mail!