A Business-First Approach To The Practice Of Law

Applying for PPP Loan Forgiveness: What Do South Florida Businesses Need to Know?

On Behalf of | Jun 16, 2020 | Business Law |

For most companies, one of the most-desirable aspects of obtaining a loan under the Paycheck Protection Program (PPP) has been the ability to have the loan forgiven in its entirety provided that certain conditions are met. However, many companies have struggled to meet the forgiveness criteria, and a significant number of businesses have discovered that they are ineligible due to the fact that they made mistakes when submitting their PPP loan applications. As a result, prior to submitting an application for PPP loan forgiveness, it is important to review your company’s eligibility with an experienced Fort Lauderdale business lawyer.

What else do you need to know before you apply for loan forgiveness under the PPP? Here are four key facts from the business lawyers at Saavedra Goodwin:

1. Obtaining PPP Loan Forgiveness Requires Documentation of Compliance

In order to have their PPP loans forgiven, companies must document their compliance with the terms of the PPP, and company leaders must certify as to the company’s forgiveness eligibility. They must also prepare for the possibility of an audit, as the U.S. Small Business Administration (SBA) has determined that, “it will review all loans in excess of $2 million, in addition to other loans as appropriate, following the lender’s submission of the borrower’s loan forgiveness application.”

2. An SBA Audit Can Lead to Significant Repercussions

If the SBA audits your company upon the submission of its PPP loan forgiveness application, the repercussions have the potential to be significant. Not only can the SBA deny forgiveness if it determines that your company has not complied with the PPP’s requirements, but it can also refer your company’s PPP loan file for review by the SBA’s Office of Inspector General (OIG) or the U.S. Department of Justice (DOJ). Due to widespread fraud under the PPP, the SBA OIG and the DOJ are both conducting targeted investigations of PPP loan recipients, and allegations of fraud can lead to civil or criminal penalties.

3. The Paycheck Protection Program Flexibility Act (PPPFA) Relaxes the Standards for Loan Forgiveness

Enacted on June 5, 2020, the Paycheck Protection Program Flexibility Act (PPPFA) relaxes some of the standards for loan forgiveness. For example, it reduces the percentage of funds required to be used for payroll expenses from 75 percent to 60 percent, and it gives companies up to 24 months (through the end of 2020) to exhaust their PPP loan funds instead of eight.

4. PPP Loans Can Be Forgiven in Part or in Full

Under the PPP, loan forgiveness is not an all-or-nothing proposition. The program’s guidelines provide that companies may be eligible for partial forgiveness under a variety of circumstances. If your company is not eligible to have its entire loan forgiven, the unforgiven amount will need to be repaid with one percent interest over a maximum five-year period (this has been extended from two years under the PPPFA).

Discuss Your Company’s PPP Loan Forgiveness Eligibility with a Fort Lauderdale Business Lawyer at Saavedra Goodwin

Do you have questions or concerns about your company’s PPP loan forgiveness eligibility? If so, we invite you to schedule an appointment with one of our attorneys. To request an initial consultation at Saavedra Goodwin, call us at (954) 928-9568 or contact us online today.

Founding Partners Damaso W. Saavedra and Allyson D. Goodwin