5 Common PPP Forgiveness Questions Answered

PPP Forgiveness: 5 Common Questions Answered
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Karine Woodman
Many of our construction business owners have been asking questions about the PPP Loan program, and how the forgiveness portion of the loan works. With all the changes that have been happing, we wanted to make sure that we made the latest information available to our readers and clients. That’s why we put together this video to help answer the common questions we’ve been hearing about. We hope you can use this information to your advantage via the video or the transcript below!

Hey, it’s Karine Woodman with 24hr Bookkeeper. I’m going to go over five common questions related to the PPP forgiveness portion of the loan. So let’s go ahead and jump right in the first question.

How much of the PPP will be forgiven?

There’s been some changes now that changed the payroll versus a non-payroll portion from 75/25 split to a 60/40. As long as you spend 60% of your PPP loan on payroll related cost, like wages, anything related to sick pay, vacation, severance benefits, health insurance benefits, as well as retirement, that would be the 60% portion. Then you have up to 40% portion related to non-payroll costs. Things such as rent, utilities, and interest on real or personal property. You can spend more than 60%, just no more than 40% on the non-payroll costs.

What documents will be required for forgiveness?

Depending on what you are asking for forgiveness, the majority of the documents will be related to payroll. You’re gonna need to identify who your employees are, their wages, what they were before and after the PPP period, as well as 9401’s and likely unemployment returns. They will want copies of your health insurance bills or proof that you actually produce those payments on health or retirement accounts. You can provide copies of checks bank statements or copies of bills. With the non-payroll portion, again, a loan schedule or loan summary showing what was principal and interest would be one portion. Then a copy of the utility bills. As long as they were in effect prior to February, you could use those costs and then show a copy of those bills.

What happens if you don’t use your whole PPP loan?

Well, really that’s up to you. You have the option to give it back, or if you wanted to maintain the loan, they did change the loan period from two years to five years. Or, I should really say from 24 months to 60 months. If you did not have a forgivable portion, you can continue to use those funds, and after the six month deferment, start making payments up to 60 months for the term of the loan.

When should I apply for forgiveness?

So, now that they’ve extended the period from eight weeks to 24 weeks, you actually can apply anytime in the 24 weeks. My suggestion would be to apply when you feel that you have covered all of the costs associated with the PPP portion. You want to go ahead and apply for forgiveness via downloading the application which you need to complete from the SBA.

Who can help me complete the forgiveness application?

This is, again, I think a tough question. Ideally, you would go to your accountant or CPA. That’s a great resource. You can also talk to your lender. I don’t know how much your lender is actually going to help you, because I think that they might want to be a little bit hands-off. But if you have somebody that is helping you financially, they might be able to provide assistance. The application is actually quite involved though. If you take the time to look at the steps, and look at the worksheet versus the application and really gather all your data correctly you might be able to actually complete it on your own. If not, talk to your lender see who they can recommend or your tax preparer, CPA can also help you.

If you are looking for more information and financial updates to help you as a construction business owner, check out our Facebook Group: Construction Cash Flow Round Table! We tackle financial issues and openly collaborate with a great community of business owners from the construction industry!

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