Best Practices for Applying for PPP Loan Forgiveness

Ready to have your PPP loan forgiven? Working with a professional bookkeeping and controller services provider can make the process much easier. 

Note: Please visit the Small Business Administration's PPP website for the current details.

Forgivable Paycheck Protection Program (PPP) loans can be a lifesaver for small businesses — provided those businesses follow all the steps required to actually have a loan forgiven. It can be a challenging process, which is why many businesses have turned to professional bookkeepers rather than go the DIY route.

Bookkeepers Know the PPP Procedures
Professional bookkeepers stay on top of all the Small Business Administration bulletins pertaining to the PPP program — bulletins like Interim Final Rule on Revisions to the Third and Sixth Interim Final Rules. Wondering how a rule can be both "interim" and "final" (not to mention why a final rule would need revision)? Well, let's just say that despite the government's best intentions, PPP loan forgiveness is a moving target. That's why you should seek assistance from somebody whose job it is to keep up with the changes.

When you enlist the help of an outsourced bookkeeping services provider, chances are you're not their only client who is applying for PPP loan forgiveness. Broad experience with these different clients has helped bookkeeping pros learn the intricacies of the process. They understand, for example, that different banks have different requirements and use different portals. By now, they've probably seen it all.

As Always, Best Practices Are Your Best Friend
We can't stress this enough: From the beginning, bookkeeping best practices have been the key to seeing your PPP loan through to a successful conclusion. You need to document what every dollar of that PPP funding was used for.

It's especially important to be consistent with the dates that define the length of your loan — starting with the day you applied for the loan, not the day you received it. Also, be aware of safe harbor provisions and the implications of the full-time equivalency calculation. Basically, you have to provide documentation showing how many employees worked full time (40 hours per week) and how many worked part time. The whole point of PPP, after all, was to help businesses keep employees on the payroll during the pandemic, so it's logical that a full accounting of who was paid what for how many hours would be part of the process.

Smooth Sailing in Rough Waters
While a PPP loan has helped many small businesses navigate rough waters, you're probably not safely in port just yet. You need to direct all of your attention to managing your core business — all the more reason to turn the loan-forgiveness process over to a seasoned bookkeeping professional. They can handle the ever-evolving requirements of the loan-forgiveness process while you keep your business afloat and moving forward.

PPP loan forgiveness update: On October 8, 2020, the SBA released a new Interim Final Rule (IFR) that provided additional guidance and simplified the loan forgiveness application form for PPP loans of $50,000 or less. Stay current on PPP guidance by checking the SBA site, or talk to your outsourced bookkeeping and controller services provider.