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COVID-19 | Planning for Debt Forgiveness


The coronavirus pandemic continues to be a very dynamic and fluid situation. Understandably, these are uncharted waters for all of us. We strive to help bring clarity to our clients through our bookkeeping and controller services. A key component of PPP loan is the option for complete government forgiveness. A clarification that's going to be forthcoming is how to apply for the debt forgiveness. So far there has not been a lot of information out there about what you will need to submit to have the debt forgiven. 

What We Know

The PPP loan will be fully forgiven if the funds are correctly used for payroll costs, interest on mortgages, rent, and utilities. Loan payments will be deferred for up to six months. Debt forgiveness is based on maintaining, or quickly rehiring employees, and maintaining salary levels. Forgiveness will be reduced for the borrower if full-time headcount declines, or if salaries and wages decrease.

What We Don't Know...Yet

There has not been a lot of talk about what kind of records will need to be kept to prove debt forgiveness. We are not sure if there would be a procedure or if there will be a checklist for those type of things. So we are still expecting that clarification. In the meantime, we've put together a reconciliation checklist for our clients and if we need to tweak it once the SBA comes out with their specifications, we can do that easily.

This is where your accounting team should come in. Be sure you are checking in with your accounting department often, even daily. We are here for our clients to help navigate the loan application process and will be their front line navigating the ongoing forecasting and analysis process, as well as ensuring pristine records are maintained to support their loan forgiveness over this period. 

If your accounting department cannot be utilized in this way, or is not prepared, either due to COVID-19 or otherwise, now is the time to talk to us.

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