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How to Relieve Your PPP Loan Forgiveness Application Anxiety

Posted on: December 16, 2020

Lesson Learned From The Front Lines of the Loan Forgiveness Application Process

By Matt Andersen, CPA, Founder, Andersen CPA PA

Small business owners everywhere are stuck in a holding pattern, trying to decide how to proceed with their Paycheck Protection Program (PPP) loan forgiveness application. Bankers are telling you to apply. Your CPA is telling you to hold off. So what now? How do you plan your 2021 budget and cash flow forecasts if you can’t get the situation resolved?

Our firm is also the recipient of a PPP loan and volunteered to serve as a guinea pig for our clients, submitting our loan application early and sharing our experience. While I immediately regretted the amount of time I  devoted to this experiment, we gained some valuable insights to share with fellow small business owners. Here are the lessons we learned and our tips to relieve the stress and anxiety this process has created.

Timing Is Everything To Everyone

We have previously advised our small business clients to take their time with PPP loan forgiveness. There are a few reasons for this. Rules about loan forgiveness continue to be debated in Congress, which has been significantly disrupted by the November elections and general political infighting. Many small businesses have chosen to wait out the transition to see if smaller loans will qualify for automatic forgiveness. There is also a lot of confusion for businesses who experienced turnover in 2020, yet were required to use the loan funds toward salaries. The tax consequences of these loans also continue to evolve. Without definitive rules on what business expenses can be deducted and what income is taxable in 2020, businesses cannot determine how filing for loan forgiveness will impact their next tax return. 

Commercial bankers will likely say something to the contrary, arguing that early applications will help some businesses. For example, if you plan to apply for new financing in 2021, you will be better served to get your PPP loan either significantly reduced or written off your balance sheet. Many are also pointing out the likelihood of a loan application backlog this Spring that could adversely impact business plans.

None of the above arguments are necessarily wrong, although we won’t hide our opinion the tax issue is an important one. The PPP puts businesses in the middle of an awkward struggle between Congress, the IRS, tax preparers, bankers, and other financial and legislative interests. Our best advice is to listen to all your advisors, consult with fellow business owners, and make the determination that works best for your business. 

Budget Extra Time For Paperwork

One of the biggest surprises we had when applying for forgiveness was the amount of time it took to compile the proper paperwork. As Certified Public Accountants, we are no strangers to paperwork and we preach the importance of proper financial record keeping to our clients. To qualify for loan forgiveness, the PPP requires businesses to provide detailed documentation on how they spent their loan proceeds during their “covered period”. We were honestly surprised by how much information was required, despite our familiarity with storing and organizing financial records. In many cases, we had to uncover multiple documents to prove a single expense including A) the vendor invoice B) proof of payment and C) bank statements confirming the transaction. 

Whether you plan to apply early, or choose to wait for later, do yourself a favor and start pulling records now. Any financial activity during your covered period should be saved and kept handy  to avoid future frustration.

Don’t Panic If The Process Is Not A Smooth One

In our own experience speaking to lending institutions, we have found that many banks are still smoothing out their loan forgiveness application process. Many are trying to streamline the application and commercial bankers who normally serve as a business owner’s primary point of contact are not always fully informed about recent changes. If you need help or advice with the actual application, you may need to look elsewhere for assistance. For example, our firm is currently offering disaster recovery coaching for which your business may qualify.

You can also look up a general PPP loan forgiveness application on the Small Business Administration (SBA) website, but know this may differ from the information provided to you by your bank. Our firm opted to fill out the SBA application first, but ended up spending time reconciling that information with the application requested by our bank. The point we are trying to make is: don’t panic! Even if it appears you will owe some money, even if you can’t get all your questions answered, keep in mind it is going to take some time to finalize the rules. There is a 6 month grace period after your application is finalized to pay back any loan proceeds. Also keep in mind any major legislative changes are likely to apply retroactively to everyone who has applied for loan forgiveness.

We have all become more comfortable adjusting to the myriad of changes in 2020. The PPP  loan application process is one of many and we will all eventually slog through the details. Today may not be the right time to file, but there are plenty of opportunities to ask, prepare, and gather information in anticipation. Failure to complete the process within 10 months of your “covered period” (either 8 or 24 weeks) will automatically require you to pay back the full amount of your loan. Time is on your side so make the most of it and avoid future panic attacks.


Matt Andersen, CPA loves analyzing data, people, and businesses. He is passionate about helping entrepreneurial-minded clients achieve their goals, keep more money in their pockets, and live a higher quality of life. In addition to tax and accounting services, Matt provides one-on-one coaching for various topics including lifestyle entrepreneurship, advanced tax planning, and new business creation.


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