Keep all records related to PPP loans and forgiveness application

“Uncertainty” is a word that defines the era of coronavirus, but there is one thing that is certain: You must keep documentation of everything you do.

Guidance continues to emerge, and more legislative changes have been made to the Paycheck Protection Program with the PPP Flexibility Act. How this will impact your loans or your qualifications for forgiveness is yet to be determined, so the best thing you can do is retain all the documentation you can for at least six years.

In May, Treasury Department and Small Business Administration clarified rules regarding the qualification for forgiveness of a PPP loan stating that any loan less than $2 million will be deemed to have made the required certification concerning the necessity of the loan request in good faith.

Put simply: Anyone who received a loan less than $2 million will not automatically be subject to an audit – but the possibility still exists. These loans are part of a government program and scrutiny will be high.

Therefore, documentation will be key not only to successfully applying for loan forgiveness, but also for protecting yourself in the event you are audited. The application for PPP loan forgiveness identifies the documents that a borrower must submit to the lender. The Small Business Administration has up to six years to audit these loans, so we recommend keeping the documentation you submit to your lender for at least six years from the time you made the application for loan forgiveness.

In addition to the PPP documents, Antares Group has published suggested minimum record retention guidelines for McDonald’s owner/operators.

Maintaining comprehensive records will also be important should you have to begin repaying the PPP loan before you receive word of forgiveness.

Even though your PPP loan may qualify for forgiveness, lenders have 60 days to submit the forgiveness application to the SBA. The SBA, in turn, has 90 days to review before issuing a determination. While lenders and the SBA may not take this long, borrowers need to be prepared for several months’ delay.

Remember, the PPP loan is a loan, meaning that it needs to be repaid if not forgiven. Under the newly passed Paycheck Protection Flexibility Act, borrowers have up to 10 months from the date they receive loan funds before they must begin to pay it back at 1 percent interest. This window should be plenty of time between making application for forgiveness and receiving word, but it is always advisable to be prepared in any event.

Lenders will have to reimburse these payments should the borrower receive forgiveness, but it is an expense that should be budgeted.