PPP Loan Forgiveness – 3 Phases of Documentation

We are here with another PPP update and message.  By now, dealing with the PPP Loan program has become a daily conversation that you are probably ready to bring to an end.  Please do not get discouraged.  We are here to help as you go through the “Covered” period to use the PPP funds, help you track your costs, and help prepare your documents for the bank.

For those that received a PPP Loan and are in the midst of using the funds, we have provided the following guidance as you go along.

Phase I – Loan Documentation

We highly encourage everyone to start a PPP Loan documentation file.  This file is intended to hold all of your important documentation related to the loan that you could provide to the bank or an SBA auditor.  You should have the following in your file.  If you need help assembling please let us know.

  • Copy of Original Loan Application
  • Copy of the calculations included within the Loan Application
  • SBA Confirmation and Loan Number
  • Narrative and analysis of your current operations to support your “need for this loan due to the “economic uncertainty” at the time of the application
  • Copy of the Loan Approval
  • Bank Statement showing the date of the original loan deposit

Phase II – Tracking Usage of Loan Proceeds

Most Businesses and Individuals are currently in the second phase of the PPP Loan Process.  In this phase, you should be tracking your usage of the loan proceeds for eligible costs that will result in loan forgiveness.  You may want to establish separate General Ledger accounts to record eligible costs during the covered period.  Here at Stancil, we have prepared a spreadsheet that can be used to track your usage.  Please let us know if you would like help in this area.  We will help with tracking eligible costs but also help you evaluate during the covered period if you are on pace to max out the forgiveness portion of the loan.  As part of the tracking, we recommend gathering the following documentation as part of your PPP Loan documentation file:

  • Form 941 from the following periods:
    • 1st Quarter 2019
    • 2nd Quarter 2019
    • 1st Quarter 2020
    • 2nd Quarter 2020 (this will most likely be needed for the banks)
  • Payroll reports from your payroll provider for the following periods:
    • February 15, 2019 through June 30, 2019
    • January 1, 2020 through March 31, 2020
    • Eight week covered period – please note that the 8 week period could end as early as the 2nd week of June for some people. 
  • Profit and Loss report for 2020
  • Profit and Loss report for the 8 week covered period on the cash basis
  • Copy of signed mortgage/loan agreement in place as of February 15, 2020
  • Copy of signed leased agreements in place as of February 15, 2020
  • Copy of utility bills during the covered period
  • Proof of employer paid retirement during the covered period
  • Proof of employer paid health insurance during the covered period

Phase III – Submission of Documents to the Bank

The final phase will require you to submit all necessary documentation to the Bank.  You will be required to submit all documentation within 60 days of the end of the Covered period.  As of the date of this communication, we have not been informed as to what the banks will need.  However, the SBA has promised that an update will be forthcoming soon. 

As mentioned in the beginning, do not become discouraged during this process.  We are here to help.  Please let us know if you need help with any of the different phases of this program.  Thank you – stay safe and well!