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Five things you need to know about the PPP loan forgiveness application

Business | October 7, 2020

Nothing about the Paycheck Protection Loan program has been clear or easy to understand and the loan forgiveness application process is no exception.  Our team at CFO Strategic Partners has been working intimately with close to 100 clients over the past several months to navigate the challenging dynamics of the Paycheck Protection Program (PPP).  We have helped clients in many different industries and have been interacting with many different lending institutions.  Based on our experience these past months, we thought we would share our latest thinking by providing you five important things you need to know in submitting your application for forgiveness of your PPP loan.  As we have learned, processing of the applications will likely involve first the lender review and verification, then it’s submitted to the SBA. The timeline for forgiveness approval is estimated to be at the earliest the first quarter of next year.

Submit early: The application itself directs you to use either the eight week original period or the extended 24-week period, which for most won’t start until early October.  In discussion with lenders, we were encouraged to apply earlier IF the qualifying expenses on a pro-rata basis covered the loan amount. Lenders are anticipating large volumes to move through this process, so the earlier you can submit, the better we feel.

Pro-rata calculation: If you submit early, we were instructed by lenders to calculate qualifying expenses on a pro-rata basis relative to the loan funding date and the 24-week eligible expense period.

Highly-compensated employees:  Be mindful highly-compensated employees still qualify for reimbursement, BUT are limited to a maximum amount in the application.  This maximum amount should also be pro-rated if filing early.

Owner compensation:  Some of this compensation may be included depending on the facts and circumstances in each case. We’ve advised our clients to seek advice from their CPA firms to navigate this technical topic. The simple advice to keep in mind here is IF you are OVER your loan reimbursement amount WITHOUT ADDING OWNER COMPENSATION then you may not want to include owner compensation in your application. It will serve to simplify the preparation of your application and the review of it by the lender and the SBA.

Simplify your application: There are many technical aspects to the timeframe used for payroll and the qualification rules for expenses.  A bit of advice from our experience on this is to keep in mind that you only need to apply with enough expense to cover the loan amount.  That means even though non-payroll costs MAY qualify – you may not need to go through the administrative headache of tracking them down to put into your application.  Keep it simple if your situation allows for you to do so.

We want to offer a caveat to all the above by saying this is based on the latest guidance from the SBA as well as our direction from various lenders. It’s also based on our experience of having applied on behalf of our clients and been approved through the first lender review phase. As has been the case throughout this process, it can and likely will change as we move through these uncharted waters, so it’s important to get guidance from a trusted professional.

Do you need help navigating PPP? Our team of experienced, on-demand outsourced CFOs can provide the support you need.  Email us at or call 407-426-8288 to learn more.

NOTE: Given the current evolving economic climate, CFOSP is publishing more frequent communications on this topic based on what our clients are experiencing and our firm’s expertise.  Stay tuned for updates or click here  for more content on this topic.

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