Many Paycheck Protection Program (PPP) borrowers are preparing to file applications that might result in PPP loan forgiveness of all or a portion of their PPP loan. While some borrowers may be able to complete the application relatively quickly, other borrowers could face challenges, including:

• Voluminous documentation requirements.

• Applications with complex calculations.

• Interfacing with lenders.

• The prospect of the government asking further questions (or conducting a review) before a PPP loan is forgiven.

Preparation and the Application for PPP Forgiveness

While some borrowers can use the simplified EZ application or Alternative Loan Application when seeking forgiveness, most borrowers probably will contend with the more complex regular application.

This regular application requires borrowers to gather substantial documentation in support of their eligible expenditures. The regular application also requires borrowers, in certain circumstances, to perform complex calculations regarding a borrower’s full-time equivalency (FTE) employee count and average employee compensation.

An Eide Bailly business advisor can:

• Assist a borrower with documenting eligible expenditures.

• Check FTE and average employee compensation calculations.

• Look for opportunities to maximize PPP loan forgiveness.

Interfacing with PPP Lenders

Forgiveness applications are submitted to and reviewed by the lender prior to any government review. The PPP and related forgiveness process is a new program for both borrowers and lenders. Consequently, some lenders may have additional questions for a borrower after a forgiveness application is submitted. Additionally, new guidance can be released affecting both borrowers and lenders.

Government Review

The government previously warned that borrowers could be subject to review before any PPP loan is forgiven, and the government also stated that any PPP loans (including affiliate loans) with an original principal balance of $2 million or greater are subject to a mandatory review. The government has further stated that a borrower could be reviewed even after a PPP loan is forgiven (for up to 6 years after the loan is forgiven).

The form of the review is not yet clear. However, we anticipate the government could focus on the following:

• A borrower’s original eligibility for the PPP loan.

• Unauthorized use (in whole or in part) of loan proceeds.

• The contents of, and the calculations contained in, the submitted forgiveness application.

Although the exact process of a review is unknown, Eide Bailly can still help a borrower prepare for likely questions. In the event of a review, Eide Bailly can also work with a borrower to respond to any government queries. Borrowers (particularly borrowers with loans of $2 million or greater) can start preparing today for a possible review and thus be ready if and when it does occur.

The Takeaway when it Comes to PPP Loan Forgiveness

The forgiveness stage of PPP loan funding is brand new for borrowers, lenders, and the government, resulting in a certain amount of uncertainty for all involved parties. A trusted advisor can help you understand the compliance components and make a plan to generate maximum forgiveness of your PPP loan.


Adam Sweet, J.D., LL.M., is a principal at Eide BaillyEmail him here.