Now that you’ve received the funding from your Paycheck Protection Program (PPP) loan, you might be wondering what happens next. A major benefit of the PPP is that it offers forgiveness of up to the full principal balance and accrued interest for loan proceeds used for covered purposes so long as employee headcount and compensation levels were also maintained during the covered period. 

While we don’t have all of the SBA details and guidelines yet, we are monitoring the program closely and will share additional guidance as more information becomes available. In the meantime, there are some things that you can start preparing as we wait for full details to be released.

It is important to note that there are differences in the program between entity types. Those who are self-employed or are independent contractors will have different guidelines than LLCs and corporations, and we will also share that information as it becomes available.

Here are some answers to questions you may have about the loan forgiveness requirements for your farm or small business:

How much of the PPP loan can be forgiven?

The actual amount of loan forgiveness will depend, in part, on the total amount of payroll costs, payments of interest on covered mortgage obligations incurred before February 15, 2020, rent payments on covered lease obligations dated before February 15, 2020, and covered utility payments under service agreements dated before February 15, 2020, over the 8-week period following the date of the loan. At least 75% of PPP loan proceeds must be used for approved payroll costs.

What requirements do I need to follow to ensure my PPP loan is forgiven?

The most important piece of guidance we can provide you at this time is to document, document, document. Create a spreadsheet to track all transactions for which you used PPP funds and keep all related receipts in a safe spot. Keep GOOD track of payroll records, so you can show that at least 75% of your loan went to payroll costs. There is also an expectation that you maintain current employee numbers during this time. The remaining 25% of the loan may be used to pay mortgage interest payments, rent and utility costs as described above.

Keep in mind that your approved loan amount was based on an average 2.5 months payroll in 2019, but you only have 8 weeks from the day you received your loan proceeds to spend it, so plan accordingly.

Think of this in the same way you document to prepare your taxes each year. You track and save receipts diligently in the case of an IRS audit. Do the same with your PPP loan forgiveness documentation, and you should be in good shape.

How do I submit this information, and what happens next?

You will submit your documentation to us here at ICB, and we will review and verify it, then send it on to the SBA on your behalf. A tentative timeline and information on next steps is provided in the FAQ link below. Complete rules regarding submission, timing and level of documentation needed are not yet finalized.

Are there any tools online that can help me with this?

At Investors Community Bank, we are closely monitoring all program aspects areas and will share PPP updates as we receive them. Make sure to follow our social media channels, and our COVID-19 business resource web page for the most up to date information.

Written by Dave Coggins

Dave is Executive Vice President - Chief Banking Officer of Investors Community Bank. He has been with the bank since 2009 and has nearly 40 years of lending and leadership experience, including 10 years as president of Business Lending Group and 24 years in various lending and leadership roles in the Farm Credit System. Dave holds a Bachelor’s Degree from the University of Wisconsin-River Falls. He is actively involved in many community/professional organizations, including serving as a board member and finance committee member for Progress Lakeshore and a member of the Wisconsin Bankers Association Government Relations Committee. He is also a recent past chair of the WBA Ag Bankers Section and a member of the ABA Ag Banking Committee.

Some content requires Adobe Acrobat Reader to view.