You secured a Paycheck Protection Program loan. Now what?
Congratulations! Your construction company secured a loan from the Paycheck Protection Program. This aid will help not only your business, but also your employees in this challenging time.
But now you might be wondering … what’s next?
Don’t worry, you’re not the only one. That’s why we asked Buildertrend’s in-house counsel and legal expert, Nick Knihnisky, for tips on what builders, remodelers and contractors should do now.
His main piece of advice? Use the loan judicially and carefully. It’s all about maximizing funds to best help your business while doing so properly to avoid any legal trouble.
If you have already received an approved loan request, you are in a great position to put your team back to work. However, that does not mean your work is done. Here are some things to know to put yourself in the best position to have the loan amount forgiven:
- Only spend the funds on eligible expenses: Acceptable uses of the loan amounts include payroll costs, mortgage interest incurred prior to February 15, 2020, rent payments on leases dated prior to February 15, 2020, utility payments and interest on debt obligations that existed prior to February 15, 2020. Any use of funds knowingly made for an unauthorized purpose may be considered fraud and exposes the borrower to negative tax implications, personal liability for unpaid loans and potentially even criminal charges.
- Remember the relevant dates: The forgiveness review period begins as soon as you receive the loan amount and continues for eight weeks. To maximize forgiveness, only spend the amounts on eligible expenses and keep in mind that your forgiveness amount will be reduced if you lay off employees or reduce wages during the review period.
- Maintain proper documentation: Track all expenditures to provide support that you spent the funds correctly. When it comes time to apply for forgiveness, your bank will request document verifying: (1) full number of FTEs on payroll and pay rate, including (a) payroll tax filings and (b) state income, payroll and unemployment insurance filings; and (2) payments on covered mortgage obligations, payments on lease obligations and utility payments, such as canceled checks, payment receipts or accounting transcripts.
- Requesting timely forgiveness: A lender can apply to the Small Business Administration for the purchase of the loan at the end of week seven of the review period. Keep this in mind as you prepare supporting documentation for your lender. Once you apply for forgiveness, your lender must issue a decision on forgivability within 60 days of receiving the application.
What else can I do to help my business in this time?
What a good question! Buildertrend’s got your back.
If you haven’t visited our COVID-19 support hub, we suggest you check it out. Here, you’ll find valuable tips and updates to keep you informed, motivated and empowered.
Additionally, you should consider making tech your new favorite power tool – if you haven’t already. Using an all-in-one project management system like Buildertrend always makes your business stronger, but there’s never been a better time to invest in software that gives you a cutting-edge. We’re happy to show you a demo.
It’s little steps like that, paired with big relief like the aid given in PPP loans, that’ll help you succeed in uncertainty.
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