PPP Forgiveness for DreamSpring clients

Update January 10, 2021
The latest economic stimulus bill passed by the Federal Government on December 21, 2020 simplified the forgiveness process for PPP loans of $150,000 and less. Instead of providing documents for a calculation, borrowers with loans under $150,000 must provide a certification to their PPP lender. If you have an existing PPP loan with DreamSpring and are ready to submit the application for forgiveness, contact us at loans@dreamspring.org or 1-800-508-7624 so we can send you the link to your unique online forgiveness application.
Update November 3, 2020
When should I apply for loan forgiveness?
There isn’t a correct time to apply for forgiveness. Applying now, or waiting both have potential advantages. This guide will provide outlines of things to consider in determining when you should apply for forgiveness of your Paycheck Protection Program Loan. You have up to 15 months after you received your loan funds to apply for forgiveness. However, we are recommending that borrowers plan on applying within a year of receiving their loan funds, which for most borrowers gives a large window of ‘when’ to apply.

The good news is that businesses are able to apply now or wait without affecting their eligibility for loan forgiveness. As a general rule, we believe businesses that received PPP loans of less than $50,000 would likely be better served by waiting and seeing if guidance changes. PPP Loans of greater than $50,000 should plan on applying whenever is convenient, as we think guidance is less likely to change.

Reasons to Wait
New legislation may be passed by Congress that makes the forgiveness process broader and easier.
There was extensive deliberation within the SBA and the Senate to provide blanket forgiveness for loans under a certain amount. The discussion initially involved forgiving all loans under $150,000 but in later discussions, the number had changed to only include loans of less than $50,000. This would save the time of applying for forgiveness but it has also been proposed that the EIDL Advance would no longer be deducted from Blanket forgiveness. For many borrowers, this will ensure that they are not left with a loan balance that needs to be repaid. While we are unable to predict what rules the SBA will enact in the future, we believe that changes are still likely.

Repayment Starts Once Your Loan is forgiven.
If your loan is not fully forgiven, you will be required to repay the outstanding balance over the remainder of the loan term. While we are hopeful that most borrowers will not have a remaining balance this is worth considering.

Reasons to Apply Now
You find having an outstanding loan balance stressful.
Many borrowers we speak with are worried about if their loan will be forgiven. If having your loan forgiving will be relieving that’s a good reason to start your application now! Even though you won’t have payments until you apply for forgiveness some people find it relieving to not have to worry about their loan.

You are considering selling your business or have an upcoming change of business ownership.
Having a PPP loan can make selling your business more difficult. If you are considering selling your business or having a change of ownership, apply for forgiveness now. 

When to apply for loan forgiveness is your choice and luckily applying now or waiting are both good choices. We will be monitoring the SBA and will keep you up to date with any changes.

Overview of the changes:

Updates from the SBA
What this means for you and your business
Extend the covered period for loan forgiveness from eight weeks after the date of loan disbursement to 24 weeks after the date of loan disbursement, providing substantially greater flexibility for borrowers to qualify for loan forgiveness. Borrowers who have already received PPP loans retain the option to use an eight-week covered period.
You have more time to use the loan funds for eligible expenses and gather documentation.
Lower the requirements that 75 percent of a borrower’s loan proceeds must be used for payroll costs and that 75 percent of the loan forgiveness amount must have been spent on payroll costs during the 24-week loan forgiveness covered period to 60 percent for each of these requirements. If a borrower uses less than 60 percent of the loan amount for payroll costs during the forgiveness covered period, the borrower will continue to be eligible for partial loan forgiveness, subject to at least 60 percent of the loan forgiveness amount having been used for payroll costs.
You have a bit more flexibility for how you can use the loan funds and still have the loan be forgiven.
Provide a safe harbor from reductions in loan forgiveness based on reductions in full-time equivalent employees for borrowers that are unable to return to the same level of business activity the business was operating at before February 15, 2020, due to compliance with requirements or guidance issued between March 1, 2020 and December 31, 2020 by the Secretary of Health and Human Services, the Director of the Centers for Disease Control and Prevention, or the Occupational Safety and Health Administration, related to worker or customer safety requirements related to COVID–19.
Even if you reduce the amount of employees you reported on your PPP Borrower Form 2483, it is even more likely that most or all of your loan will be forgiven by the SBA depending on the specifics of your situation.
Provide a safe harbor from reductions in loan forgiveness based on reductions in full-time equivalent employees, to provide protections for borrowers that are both unable to rehire individuals who were employees of the borrower on February 15, 2020, and
Extend the covered period for loan forgiveness from eight weeks after the date of loan disbursement to 24 weeks after the date of loan disbursement, providing substantially greater flexibility for borrowers to qualify for loan forgiveness. Borrowers who have already received PPP loans retain the option to use an eight-week covered period.
You have more time to use the loan funds for eligible expenses and gather documentation.
The law has been enacted, however, the Small Business Administration (SBA) must now write up new detailed guidance and release an updated loan forgiveness application. DreamSpring will not be processing forgiveness applications until these rules are finalized.
NOTE for Sole Proprietors, Independent Contractors, Self-Employed individuals with no other employees:
Documentation of payroll expenses: You will not be asked to provide a payroll report or payroll tax filing paperwork. You do not need to provide receipts for use of the loan funds on any personal expenses.