Maintaining PPP Loan Records to Maximize Forgiveness-Spencer Mortgage

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MAINTAINING PPP LOAN RECORDS TO MAXIMIZE
FORGIVENESS
By Spencer Savings www.spencersavings.com
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OVERVIEW
One of the most compelling aspects of the
Paycheck Protection Program (PPP), enacted as
part of the 2020 CARES (Coronavirus Aid, Relief,
and Economic Security) Act, is the potential
forgiveness of all or part of the loans designed
to maintain small business employment during the
height of the pandemic. Payment Protection Plan
loans to small businesses provide much needed
economic relief during COVID-19, but only if
complete and accurate records are
maintained. Achieving the maximum forgiveness,
however, is going to require maintaining and
providing a wide array of documentation that may
have to be generated by different systems and in
varying formats. To ensure full advantage of the
PPPs provisions, small business owners will have
to examine their technology infrastructure and
financial management tools so that they are able
to prepare and submit the required PPP
documentation.
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Understanding PPP / New PPPFA
The PPP authorizes companies with fewer than 500
employees to borrow up to 10 million to cover
expenses, including payroll, rent, utilities,
and mortgage interest. The loans may be
forgiven, in full or in part, if business owners
spend the majority of their borrowed funds for
maintaining payroll (salaries, health insurance
and retirement contributions) for a certain
period following the loans origination date.
Other eligible expenses include certain rent,
utility, and interest payments. Loan amounts are
based on 2.5 times the average monthly payroll
costs in 2019 or over the past 12 months.
Initially, the PPP required that the proceeds be
spent within eight weeks. However, the recent
enactment of the Paycheck Protection Program
Flexibility Act (PPPFA) has extended that period
to the earlier of 24 months or by December 31,
2020, although borrowers who took a loan out
under the original PPP may still opt to use the
eight-week period.
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Any portion of the loan that is not forgiven must
be repaid over two years at a one percent
interest rate, for those who took the loan out
under the initial PPP, or five years for those
who took it out after the enactment of the PPPFA.
The new law lowers the requirements that 75
percent of a borrowers loan proceeds must be
used for payroll costs. The Small Business
Administration and the Department of the
Treasury have yet to issue guidance or
regulations on this new law, so borrowers should
look for more specifics which are subject to
change. Making the determination about
forgiveness will require a variety of records,
such as data that is exported from payroll
services, financial management platforms, and
banking websites, as well as scans of printed
documents. Assembling and maintaining these
records will be a time- consuming process for
business owners and their bookkeepers and
accountants.
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Record Storage
Given this potential delay, cloud storage of
these important records will provide a safer
option than keeping records on a local device
from which you may not be able to retrieve
information in a few years. Be sure to keep
several backups of this data as well. Some of the
records that business owners will need to
maintain include Payroll reports for each
worker and pay period, including federal, state,
and local payroll tax reports. If you use a
payroll service, download and store this data.
Health insurance premiums and unemployment
insurance costs. Retirement plan funding. Lease
agreements and payments for your workplace and
equipment. Utility payments and other expenses.
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Most of this data will need to be tracked in
spreadsheets or your financial management
system. Talk with your lender about their
preferred format or specific requirements, such
as scanned copies of agreements that were in
place before the pandemic began. Youll also need
to store all correspondence with your lender,
both by email and written, about the original
need for a loan and your application. Documentin
g spending and maintaining accurate records now
can pay important dividends in determining the
forgiveness of your companys PPP loan. Previous
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ABOUT US

• Spencer Savings Bank is a full service, mutually
  owned and operated, community bank operating 21
  branches across New Jersey. Weve been in
  business for over 100 years, have more than 2.7
  billion in assets and a team of nearly 300
  dedicated employees who specialize in delivering
  premier banking products and services.
• Spencer prides itself on being one of New
  Jerseys strongest community banks maintaining
  its distinct image of trust, security and
  commitment to its customers throughout all these
  years. We meet the full range of individual,
  business, commercial, and municipal banking
  needs through our broad menu of banking products
  and services. From basic personal checking
  services and small business products to
  financing expertise on multi-million dollar
  properties and commercial enterprises, Spencers
  banking capabilities are on par with those of the
  larger regional and national banks. Our highly
  experienced management team provides a unique and
  personal approach to banking locally, servicing
  its customers with an exceptional level of care
  that can rarely be found at larger banks.
• At Spencer, we understand the importance of
  getting to know you as a customer. Not only will
  you have access to our broad menu of banking
  capabilities, youll also receive the personal
  attention you deserve as a valued customer. By
  taking the time to understand your needs, we
  become partners in the success of your business
  and personal financial goals. Were also proud to
  partner with our neighbors to improve the
  quality of life for our community. With our roots
  as a community bank, we proudly support local
  business and workforce initiatives in the areas
  we serve, in addition to numerous civic groups,
  charitable organizations and youth educational
  programs.

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CONTACT US
Mailing Address 611 River Drive, Elmwood Park, NJ
07407 Email Address personalaccounts_at_spencersavi
ngs.com Phone number 1-800-363-8115