Achieving PPP Loan Forgiveness

All information is based on our current understanding as of the date that it is posted. Please keep in mind this information is changing rapidly – it can and likely will change. Some information becomes outdated the same date it posted. Although we will monitor and update this page as new information becomes available, please do not rely solely on this page. We encourage you to contact your Slattery & Holman advisor for the latest information.

Businesses that have managed to secure financing through the Paycheck Protection Program (PPP) are fortunate, but still face deciphering the ambiguous definitions and requirements for determining loan forgiveness. Owners and managers must carefully adhere to the terms of the program in order to qualify for loan forgiveness.
In response to the coronavirus pandemic, Congress created the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The historic $2.2 trillion stimulus bills included $350 billion towards the PPP, a forgivable loan program to aid small businesses dealing with the financial impact resulting from the coronavirus pandemic. Unfortunately, the Small Business Administration (SBA) loan program was rapidly flooded with applications and the monies appropriated for relief and emergency loans were quickly extinguished. Congress has approved and President Trump signed on April 24 the additional $320 billion for the program.
While business owners who did secure a PPP loan are fortunate, they have a lot of work ahead of them. In order to qualify for loan forgiveness, the PPP funds must be used for certain allowable purposes, including:
  • Salaries, wages, commissions, or similar compensations (up to $100,000 per year per employee, prorated) should make up 75% of the money used;
  • Cash tips or equivalent;
  • Employee leave, including parental, family, medical, or sick (excluding family or sick leave under the Families First Coronavirus Response Act);
  • Allowances for dismissal or separation;
  • Group healthcare benefits, including insurance premiums;
  • Retirement benefits;
  • State or local taxes on employee compensation (not including the employer’s share of FICA payroll taxes, Railroad Retirement Act taxes, or other required U.S. income tax withholdings);
  • Continuation of group healthcare benefits during employee leave and insurance premiums;
  • Rent and utility payments;
  • Mortgage interest and interest on other debt obligations incurred prior to February 15, 2020;
  • Compensation and income of up to $100,000 per year (prorated) for sole proprietors and independent contractors.
Money used for any of the allowable purposes listed above will qualify for 100% forgiveness; loan money used for non-allowable purposes must be repaid. This means that businesses who take on PPP loans must shoulder the burden of new reporting requirements. Failure to keep thorough records of how the loan money is used could result in loss of forgiveness for some portions of the loan money. For detailed information specific to loan forgiveness, click here.
In order to qualify for loan forgiveness, recipients will need to provide banks with specific information, including up-to-date financials. Organizations should work closely with their financial team to better position themselves to comply with reporting regulations. Businesses without an internal team member would benefit greatly from securing outside help to adhere to the strict rules.
If your organization does not have the internal resources to prepare, or would just like help handling this task, consider reaching out to us at Slattery & Holman to discuss your options. Our team is prepared to help guide your organization in achieving successful PPP loan forgiveness and more. We can assist you with:
  • Bookkeeping catchup and cleanup for the first quarter of 2020
  • Preparation of payroll cost calculations needed for the PPP application
  • Assistance with PPP and other loan applications related to the coronavirus pandemic
  • Help with performing real-time reporting in order to adhere to loan forgiveness regulations
  • Advice and guidance for post-pandemic success
Our team is here to offer sound advice, clear guidance, and knowledgeable input to help you achieve financial relief during this uncertain time. Contact us today to discuss how we can accommodate your unique situation.