Getting a jumpstart on PPP loan documentation could help you – and your lender

9/14/2020
Jumpstart your PPP loan documentation process

If you’ve taken out a PPP loan, you might want to consider applying early for loan forgiveness – it could benefit you and help build a stronger relationship with your lender.

If you’ve already used (or are planning to use) your PPP loan funds before the end of your 24-week covered period, you might want to consider applying early for loan forgiveness. Applying early gives you the opportunity to gather all your required PPP loan documentation, make your calculations, and work with your lenders before the rush of forgiveness applications. Knowing how much of your PPP loan will be forgiven gives you more time to plan and prepare as you work to stabilize your business.

First, you’ll want to check with your lender to see if applying early is an option. Some lenders are already accepting applications, while others are taking a different approach. Lenders who are accepting early applications will be processing a large number of applications, and they’re as new to this process as you are. Getting in early will allow them to work more closely with you on any questions you might have. While your lender will process your application, it’s ultimately your responsibility as the borrower to make sure everything is accurate and complete. As a borrower, make sure you know exactly what your responsibilities include.

Know what the official guidance says

According to interim final rules:

Providing an accurate calculation of the loan forgiveness amount is the responsibility of the borrower, and the borrower attests to the accuracy of its reported information and calculations on the Loan Forgiveness Application Form. Lenders are expected to perform a good-faith review, in a reasonable time, of the borrower’s calculations and supporting [PPP loan] documents concerning amounts eligible for loan forgiveness. … The borrower shall not receive forgiveness without submitting all required [PPP loan] documentation to the lender. … If the lender identifies errors in the borrower’s calculation or material lack of substantiation in the borrower’s supporting [PPP loan] documents, the lender should work with the borrower to remedy the issue.

The Crowe PPP Tool for Borrowers helps you manage your PPP loan application from start to finish.

Know your role in the process

While your lender will review your calculations and paperwork, the burden is on the borrower to make sure the calculations are accurate and complete. Though statements made indicate that any PPP loan over $2 million automatically is subject to Small Business Administration (SBA) audit, the interim final rules also state that the SBA may undertake a review for any PPP loan, at any time, using its discretion. Because of these potential reviews, borrowers must retain PPP loan documentation for six years after the date the loan is forgiven or repaid in full. Specifically, the SBA is authorized to review:

  • Borrower eligibility based on the law, rules, and guidance available at the time of the borrower’s application and the terms of borrower’s application
  • Loan amounts and use of proceeds – whether a borrower calculated the loan amount correctly and used loan proceeds for allowable uses
  • Loan forgiveness amounts – whether a borrower is entitled to forgiveness in the amount claimed on the borrower’s loan forgiveness application

Know your options

Once you submit your loan forgiveness application, your lender will confirm receipt of your forgiveness calculations, your required certifications, and the required documentation to verify your costs and calculations. At that point, the lender is required to issue a decision to the SBA within 60 days and can either approve the PPP loan forgiveness amount (in whole or in part), deny forgiveness, or (if directed by the SBA) deny forgiveness without prejudice due to a pending SBA review of the loan. Within 90 days after the lender’s decision to forgive any amounts, the SBA (subject to its review) is required to submit forgiven amounts to the lender along with any accrued interest and minus any Economic Injury Disaster Loan advance.

Contact us

The PPP loan documentation process can be complex for both borrowers and lenders – but ultimately, the borrower shoulders the burden for making sure all calculations are correct. If you’re looking for help working through this process, look at our PPP Tool for Borrowers or contact our payroll relief consulting team.
Veena Murthy
Veena Murthy
Principal, Washington National Tax