Many of our clients have applied and been approved for Paycheck Protection Program (“PPP”) loans under the CARES Act.

One of the primary benefits of a PPP loan is that all or a portion of the loan can be forgiven. Forgiveness hinges on careful planning and compliance with the CARES Act. A borrower seeking forgiveness of all or a portion of its PPP loan will be required to submit a written application to its lender, who is required to review the materials submitted, determine forgiveness eligibility and the extent of loan forgiveness, and then issue a decision within sixty (60) days. In other words, forgiveness is NOT automatic.

Loan forgiveness is not a simple process, and involves analysis of, among other things, how the PPP loan proceeds were used in the eight week period immediately following receipt of loan proceeds and comparisons between employee head counts at various points in time. Simply stated, the decisions you make now will matter when you seek forgiveness. Therefore, borrowers desiring to maximize loan forgiveness would be well advised to ensure they understand the rules, requirements, and traps for the unwary now, so that they can plan how to use the loan proceeds over their eight-week “spending period.” This is particularly true for borrowers fortunate enough to have already received loan proceeds, as they are already “on the clock” in terms of the forgiveness analysis. Borrowers who use the loan proceeds without a clear understanding of how the forgiveness process works are at risk of losing out on forgiveness.

Now is a critical point in time for many small businesses. The attorneys at Metz Lewis Brodman Must O’Keefe LLC have invested substantial time and resources to prepare themselves to assist clients in need of assistance with PPP loan forgiveness. We have developed written summaries and tools to assist borrowers, with a focus on practical, easy to understand guidance on this new government loan program. Please contact your Metz Lewis contact, Brian Golias or Roger Poorman if we can be of assistance.

This post was written by Roger Poorman and Brian Golias

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