ABCs of Ensuring Full PPP Loan Forgiveness for Your Nonprofit
Nonprofits and organizations are starting to bounce back after the lost year that was 2020 and at this point in 2021 should be wrapping up their reporting for the Paycheck Protection Program (“PPP”). Many organizations chose to participate in this loan program to offset eligible payroll costs during the pandemic. The program is still open – but time is running out to apply.
According to this recent survey, 71% of nonprofits in the country who responded to the survey received a PPP loan. With full loan forgiveness as the goal, the extra reporting requirements can be overwhelming to navigate. Numbers 4 Nonprofits continues to assist our clients who received PPP loans to ensure they receive full loan forgiveness and works with those who are interested in applying or were previously denied. Read on for four “elementary” tips to keep in mind when considering the PPP loan and how best to achieve full loan forgiveness.
Learn the PPP Process and Deadlines
The requirements for full PPP loan forgiveness are the same for both for-profit and nonprofit entities, but as you were taught in grade school, it is very important to CAREFULLY follow the directions. For example, you must adhere to the rules of the loan and prove that the loan went toward employee payroll during the COVID-19 shutdowns. It is also important to keep an eye on deadlines; nonprofits have 10 months after using the last funds from the loan to apply for loan forgiveness. Click here for all the information needed to keep your nonprofit on track.
Keep Payroll Records Easy to Understand
Lean on your nonprofit accountant to assist you with this. Your lender will be very pleased if all information concerning payroll and other required records are gathered clearly and concisely. Additionally, if your nonprofit borrowed less than $150,000, only one form must be filed for loan forgiveness – and you don’t even need to show your math!
Accounting for the PPP loan
How did your nonprofit account for the PPP loan? Did you label it as a government grant or as debt? If the latter, it is important to accrue interest expense since proceeds were treated as a liability. Your accountant and Board Treasurer should have assisted in this process of categorizing expenses properly. Routinely referring to documents issued by the Small Business Administration (“SBA”) when using the PPP loan is extremely important because rules have changed several times in the last year and you want to be sure you are following the latest guidelines.
Applying for the PPP
Your nonprofit may still be eligible to apply for PPP money but time is quickly running out. $35 BILLION remain available until May 31st but the SBA is expecting that money to run out before then. Make sure to speak with a lender ASAP. Here are the rules for nonprofits and you MAY be eligible even if you applied last year and were denied.Numbers 4 Nonprofits is committed to managing money with mission. We can help your nonprofit navigate the PPP application process as well as assist with your other accounting needs.