Now that you have received a Paycheck Protection Program (PPP) loan for your business, the next thing you want to do is try to ensure that most or all of the loan is forgiven. One of the most important things PPP loan borrowers will need to do is keep documentation of how the funds were spent.
The PPP loan documentation will allow you to create a narrative that proves you spent the funds in accordance with the rules. The documents you provide will determine the expected amount of forgiveness of all or part of the loan.
It is currently recommended by the Small Business Administration’s (SBA) interim final rules to provide the following PPP loan documentation, at a minimum:
- Payroll costs
- Covered mortgage interest payments
- Covered rent payments
- Covered utilities
- Documents submitted in your PPP loan application
- Payroll tax filings
- Canceled checks
- Other payment documentation
Additionally, you will have to provide certification that all the documentation provided is correct and true. It is recommended that you have a conversation with your PPP loan administrator to learn about any other additional documentation they may require in determining whether the expected loan forgiveness amount is reasonable.
Once you compile your PPP loan documentation, it is important to retain it, for the time being. It is not clear when audits of loans will begin, so retaining the documentation will help you be prepared should you be audited.
Following good practices for documenting any type of loan you are expecting any type of forgiveness on is recommended for your PPP loan, as well.
The SBA has issued the PPP Loan Forgiveness Application which provides you additional details on which documentation is needed for forgiveness. Once you complete this application you need to submit it to your lender for your forgiveness to be granted.
If you have any questions on which documentation you should have prepared to present to your PPP loan administrator for forgiveness, please contact your Untracht Early advisor.