3 Lessons on PPP Loan Forgiveness From Small-Business Owners

Millions of business owners who borrowed from the Paycheck Protection Program can now apply for loan forgiveness.
Kelsey Sheehy
By Kelsey Sheehy 
Edited by Christine Aebischer

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Despite the confusion, delays and headaches many small-business owners endured to secure a Paycheck Protection Program loan, having the balance forgiven may prove surprisingly, refreshingly simple.

“Honestly, the whole process was incredibly easy and straightforward,” says Jill Draper, owner of Jill Draper Makes Stuff, a yarn shop in upstate New York. “The bank sent a DocuSign form and almost everything was autofilled.”

She simply checked a few boxes to indicate how she spent her $9,100 loan, the first of two PPP loans she received. About 10 days later she got the email: Her loan was forgiven in full.

Draper’s experience isn’t a fluke.

Bethany Rusen, founder and director of Black Hound Clay Studio in Philadelphia, had her first PPP loan ($9,789) forgiven on March 5, 2021.

“It was really, really easy,” Rusen says. “It was essentially me just uploading all of the stuff from my payroll processor.”

Ciara Pressler, founder of Pregame, a business coaching and consulting firm, admits she initially put off applying for forgiveness of her $3,002 PPP loan.

“I kept pushing it off because I was afraid it would be a big process with a lot of documentation,” Pressler says. That wasn’t the case. “It was such a simple and fast process that I could have done it right away. It only took a few minutes.”

Draper, Rusen and Pressler have different business structures — sole proprietor, LLC and S corporation — and used different types of lenders — credit union, big bank and nonbank lender — but there are a few common threads that made PPP loan forgiveness seamless.

First, their loans were less than $150,000. Borrowers with loans in that range don’t need to show the receipts. In most cases, you just need to check a box stating you complied with PPP requirements around payroll costs and eligible expenses. (You also need to show qualifying revenue loss for second-draw loans.)

The vast majority of PPP borrowers fall in this group. Of the nearly 6.7 million PPP loans issued in 2021, 95% were for $150,000 or less. In 2020, 87% of all PPP loans were for $150,000 or less.

While you can’t control your loan amount — that’s up to a U.S. Small Business Administration formula — you can control other factors to make loan forgiveness easier.

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1. Relationships matter

Pressler’s PPP loan was through Chase, where she has her business checking account and is on a first-name basis with her business banker (she was even in a book club with one of her bankers).

That connection made all the difference when applying for her loan and for forgiveness. She had her banker’s ear, despite qualifying for a few thousand dollars at a time when Chase was issuing PPP loans of more than $100,000, on average.

Draper’s relationship with her lender, Hudson Valley Credit Union, goes back more than a decade. That allowed her to have an “easy back and forth” with her banker from start to forgiveness.

2. Keep a COVID file

When the pandemic shut down her studio, Rusen started a COVID-19 file to house all relevant information.

“I have an MFA in ceramics; I’m not a super business-minded person in terms of keeping track of those little bits and things,” she says. “Keeping it all in one place was really, really helpful for me because I could easily find things without endlessly searching in multiple places.”

Draper did the same, creating special folders (digital and paper) with copies and scans to document how every penny of her PPP loan was spent. She didn’t need to provide those records for her loan forgiveness, thanks to the simplified application, but she has them at the ready should the loan be audited.

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3. Questions? Lean on experts

As questions arise, and they will, turn to professionals — your accountant, your lender and the SBA — rather than online armchair experts.

“There’s so much information, and on social media stuff gets passed like telephone,” Draper says. “It’s helpful to know exactly what’s going on versus some third-party account on Twitter.”

Confused about forgiveness terms or struggling with an unresponsive lender? The SBA has webinars and counselors to help with all things PPP-related.