The PPP program now allows borrowers the option of extending the eight week period following the loan disbursement date during which forgivable expense could be incurred to twenty-four weeks. In addition, the required payroll cost as a percentage of total forgivable expenses has been reduced from 75% to 60%.
Many banks are now accepting PPP Forgiveness Applications. Once the borrower has incurred forgivable expenses up to or greater than the amount of the PPP loan, consideration should be given to filing Small Business Administration (“SBA”) Form 3508 or 3508EZ along with appropriate supporting documentation with your lender. Borrowers need not wait until the eight or twenty-four month forgiveness period has expired.
Borrowers should contact their lender to understand the forgiveness process as each lender may do it slightly different. The lender must make its decision on forgiveness no later than 60 days after receipt of the borrower’s application. During the process, the SBA’s expectation is that lenders will work with borrowers to resolve outstanding issues. The SBA has up to 90 days following the lender’s decision to review and either confirm, amend, or deny that decision.
For financial reporting purposes, the National Futures Association (“NFA”) has previously issued guidance stating that the full amount of the PPP loan should be remain as a liability on the balance sheet until forgiveness is confirmed. For Introducing Brokers (“IBs”) filing 1-FR forms in particular, this will appear in Box 2025 Loans Payable. In computing Net Minimum Capital, IB’s should enter the amount of forgivable expenses incurred through the financial statement date in Box 3070 effectively reducing the amount of liabilities used in the computation.
If you have questions concerning your PPP loan or need assistance preparing the PPP Forgiveness Application, please contact Mike Coglianese at (630) 461-5841 or firstname.lastname@example.org.