The Small Business Administration’s (SBA) Paycheck Protection Program (PPP) has assisted over 4.7 million small businesses across the country, saving many from a permanent closure. The ability to have all or some of the loan forgiven is a tremendous benefit, but can be a confusing and tedious process. Below are some helpful tips to prepare you for application.
Review the Application:
The Form 3508 and 3508 EZ application and their instructions can be found at www.Treasury.gov. I highly recommend downloading a copy of each and reading through them. Start with the EZ form instructions, which include three scenarios where this shorter form can be used. If you do not qualify under one of those options, then switch to the longer form and follow its instructions. Both sets of instructions go into detail on the covered period, what payroll and non-payroll expenses count in forgiveness and what documentation you will need when applying through your lender. It also discusses what information you will need to keep on file and the required time period.
As with the PPP loan application process, SBA and Treasury update information regularly as new questions are asked or new policies are adopted. The Treasury website is the best place to find the most current information. Certainly ask you lender questions as well. They will either know the answer or know the channels to get an answer if your question is unique to your situation. Contacting SBA may be helpful, but may take longer to obtain an answer.
Talk to Your Lender:
While the rules are the same for the program, each lender may handle the process differently depending upon their platforms and capabilities. Some will expect paper applications while other will have an online portal to process applications electronically and upload supporting documents. Many may post information on their website as well.
Document, Document, Document:
In the normal SBA world, we are taught to document our decisions thoroughly when making a loan under our delegated authority. Since these loans hold lenders harmless, it is the borrower’s responsibility to properly complete the application and provide the supporting documentation. SBA reserves the right to audit any loan file and requires record retention for six years. As a borrower, you have the right to appeal any decision that might reduce or deny forgiveness. Retaining all related information will allow you to be adequately prepared should this occur.
Applying for forgiveness does not have to be a rush once your covered period has expired and funds have been spent. Currently, borrowers have up to 10 months after their covered period expires to apply and will have payments deferred during this period. So, take the necessary time to ensure your information is complete and correct.
SVP, SBA Sales Manager, First Financial Bank