The deadline to apply for a PPP loan may have passed by, but for those who’ve already received their loans, it’s not too late to send in a second application for possible loan forgiveness. This could mean massive savings from a potentially large repayment, depending on how much you’ve received thus far. Read on for some context and details on how borrowers could be eligible for forgiveness, and how an online accounting service can make the process much easier with document tracking, storage, and organization.
What are PPP Loans?
Paycheck Protection Program loans came about as part of the CARES Act, with an aim at giving small businesses a leg to stand on in the form of flexible loans. It was a government-provided mechanism of survival for small business throughout COVID-19’s upheaval of business, employment, and life altogether. As the original wave of loans was drained and spent, an extension of the program’s deadline along with a fresh injection of funds was put into motion.
The program started in early April 2020 and ended on May 31, 2021, though the SBA encourages current borrowers to look into their eligibility for PPP loan forgiveness. The SBA counted over 11 million approved PPP loans as of March 31st, 2021, with most of the funding being sent to businesses in the industries and states most adversely affected by COVID-19.
The bulk of the loans were smaller, under $100,000. According to the SBA, the average approved PPP loan is around $68,000 and has since decreased to about $42,000 in 2021. Overall, it’s been the most turned-to option for businesses just trying to salvage what they can from the economic damage leftover by COVID-19.
What Is PPP Loan Forgiveness?
Being eligible for PPP loan forgiveness means that if you’ve received government support thanks to the CARES Act, you could be eligible to have some or all of your PPP loan obligations cancelled. In other words, you won’t have to pay it off anymore.
There are a two forms of loan forgiveness terms: first draw, and second draw. Now, both of their terms contain the same three key requirements:
● Employee and compensation levels must be maintained
● Any loan proceeds must be used for payroll and other eligible expenses
● No less than 60% of loan proceeds are spent to cover payroll costs
Smoothen Out the PPP Loan Application Process with an Online Accounting Service
In order to apply for PPP loan forgiveness, you first need to contact your lender and fill out the related forms - either an SBA 3508, 3508EZ, or 3508S, the last two being quicker versions for those who meet certain criteria.
Next, you’ll have to collect a mountain of documents for review. This includes documentation related to payroll such as business account statements, or the reporting available on convenient online accounting platforms. This is where ano online accounting service comes in handy.
Third-party online bookkeeping providers are capable of storing documents and recording transactions with ease, so that time spent rummaging around for missing tax forms won’t hinder you from applying for loan forgiveness. Save time, energy, and ultimately get your application in quickly to see if your business is eligible for debt-saving PPP loan forgiveness.
 https://smartasset.com/financial-advisor/paycheck-protection-program-ppp-loans  https://www.sba.gov/funding-programs/loans/covid-19-relief-options/paycheck-protection-program  https://www.finder.com/ppp-loan-stats  https://www.sba.gov/funding-programs/loans/covid-19-relief-options/paycheck-protection-program/ppp-loan-forgiveness  https://www.sba.gov/funding-programs/loans/covid-19-relief-options/paycheck-protection-program/ppp-loan-forgiveness