3 Lessons To Forgive PPP Loans From Small Business Owners


Kelsey Sheehy | NerdWallet

Despite the confusion, delays, and headaches that many small business owners have faced in order to obtain a paycheck protection loan, forgiving the balance can be surprisingly refreshingly simple.

“To be honest, the whole process was incredibly simple and straightforward,” says Jill Draper, owner of Jill Draper Makes Stuff, a yarn store in upstate New York. “The bank submitted the DocuSign form and almost everything was filled in automatically.”

She simply ticked a few boxes to indicate how she spent the $ 9,100 loan, the first of two PPP loans she received. About 10 days later, she received an email: her loan was completely written off.

Draper’s experience is no coincidence.

Bethany Rosen, founder and director of Black Hound Clay Studio in Philadelphia, received her first PPP loan ($ 9,789) on March 5, 2021.

“It was really very simple,” says Rosen. “Basically, I was just loading all the data from my computational processor.”

Ciara Pressler, founder of Pregame, a business coaching and consulting firm, admits she initially delayed applying for forgiveness for her $ 3,002 loan.

“I kept pushing him away because I was afraid it would be a complicated process with a lot of documentation,” says Pressler. This was not the case. “It was such a simple and quick process that I could do it right away. It only took a few minutes. “

Draper, Rosen, and Pressler have different business structures – sole proprietorship, LLC, and S corporation – and have used different types of lenders – credit union, large bank, and non-bank lender – but there are a few things in common that made PPP loan forgiveness flawless.

First, their loans were less than $ 150,000. Borrowers with loans in this range do not need to show receipts. In most cases, you just need to check the box that says you are in compliance with PPP requirements for payroll and eligible costs. (You also need to report the corresponding loss of income for second-issue loans.)

The vast majority of PPP borrowers fall into this group. Of the nearly 6.7 million PPP loans issued in 2021, 95% were no more than $ 150,000. In 2020, 87% of all PPP loans were no more than USD 150,000.

While you cannot control the amount of your loan (this depends on the US Small Business Administration formula), you can control other factors to make loan forgiveness easier.

1. Relationships matter

The PPP Pressler loan was made through Chase, where she has a checking account and works on behalf of her business banker (she even went to a book club with one of her bankers).

This connection played a decisive role in applying for a loan and forgiveness. She listened to her banker despite being eligible for several thousand dollars at a time when Chase was making PPP loans on average over $ 100,000.

Draper has a relationship with her lender, the Hudson Valley Credit Union, for over a decade. This allowed her to “easily go back and forth” with her banker from start to forgiveness.

2. Save the Covid file.

When the pandemic closed her studio, Rosen launched a Covid-19 file to store all the information she needed.

“I have a master’s degree in ceramics; I’m not one of those superbusiness people when it comes to keeping track of these little things and stuff, ”she says. “Keeping all of this in one place was really very helpful for me because I could find things easily without having to search endlessly in multiple places.”

Draper did the same, creating special folders (digital and paper) with copies and scans to document how every penny of her PPP loan was spent. She didn’t need to provide these records for the loan forgiveness, thanks to the simplified statement, but she has them ready in case of a loan audit.

3. Questions? Rely on experts

As questions arise, they will turn to the professionals – your accountant, lender, and SBA – rather than the online desk experts.

“There is so much information, and social media is communicated like over the phone,” Draper says. “It’s helpful to know exactly what’s going on compared to any third party Twitter account.”

Not sure about the terms of forgiveness or struggling with an unresponsive lender? IN SBA has webinars and consultants to help with everything related to PPP.

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Kelsey Sheehy writes for NerdWallet. Email: ksheehy@nerdwallet.com

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