5 Practical Tips for Maximizing Forgiveness of Your PPP Loan

By Drea Schmidt

    1. Designate a PPP Point Person
      • Someone internal to your organization should have a good handle on the rules for forgiveness. The rules are complicated, and they could shift before you apply for forgiveness, so it’s a good idea to have a specific person tracking the requirements.
      • Your PPP point person should also maintain contact with your lender and your other advisors on PPP issues, such as your CPA and attorney.
    1. Time Is of the Essence
      • Funds must be used within eight weeks of origination of your loan (the date of funding) in order to be eligible for forgiveness.
      • As far as we know, there is no flexibility in timing requirement, so plan to use all the funds within a strict eight-week period. 
    1. Recordkeeping Is the Name of the Game
      • You will have to show that you meet the conditions for forgiveness, so be meticulous in recordkeeping.
      • Get organized now, and stay organized.
      • Document number of full-time employees during your eight-week loan forgiveness period and during the relevant comparison period.
      • Keep detailed records of what you spent the funds on and when. 
      • If you can, consider creating a separate bank account to manage the funds.
    1. Prioritize Payroll
      • Allocate loan proceeds to payroll costs first, to ensure that at least 75% of proceeds are used for payroll costs.
      • Use any remaining funds for other permitted loan uses (such as rent, utilities, and mortgage interest).
    1. Stay in the Loop with your Lender
      • Your lender will interpret the applicable rules and guidance regarding forgiveness and facilitating the forgiveness process. 
      • Also, your lender may require additional documentation for forgiveness, so make sure you understand your lender’s specific requirements.

This update is provided as general information of and should not be regarded as legal advice.  If you have questions about PPP loans, please contact your primary Tonkon attorney, Drea Schmidt (drea.schmidt@tonkon.com), Jeff Cronn (jeff.cronn@tonkon.com), Ferdie Ruplin (ferdie.ruplin@tonkon), or Betsy Judd (betsy.judd@tonkon.com).

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