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3 Things Small Businesses Should Know About PPP Loan Forgiveness

SBA streamlines process that some borrowers can use to convert money to a grant

Paycheck protection program ppp loan for small business forgiveness application.
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The PPP was intended primarily to keep small businesses — which employ roughly 47 percent of all private sector employees — from firing workers. That means that borrowers were expected to keep the same average number of employees while also not cutting wages for workers who were earning less than $100,000 annually. Under the original PPP guidelines, significant drops (more than 25 percent) in either of those criteria can reduce the amount of the PPP loan that is eligible to be forgiven.

The new simplified application, however, does not actually require borrowers to do the calculations to reduce the amount eligible for forgiveness based on any drops in staffing and/or wages. Removing that step will make it easier for borrowers of small PPP loans to apply for forgiveness, but financial advisers warn that it doesn't necessarily mean that those owners who significantly cut staffing and/or wages have nothing to worry about. The SBA might eventually ask for further documentation during follow-up.

If changes to staffing and/or wages have you concerned about how much of your PPP loan could ultimately qualify for forgiveness, you have until Dec. 31, 2020, to raise wages and bring back workers to be eligible for the full amount of forgiveness.

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