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What if I Made a Genuine Mistake on My PPP Application?
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What if I Made a Genuine Mistake on My PPP Application?
The Paycheck Protection Program (PPP) provided a lifeline for many small businesses during the COVID-19 pandemic. However, the rushed nature of the program and confusing, frequently changing rules led some business owners to make inadvertent errors on their applications. If you made an honest mistake on your PPP loan application, don’t panic – there are still options.
Common Good Faith PPP Application Mistakes
Some of the most common “good faith” mistakes made by PPP applicants include:
- Math errors in calculating payroll costs
- Inaccurate accounting of full-time equivalent (FTE) employees
- Mistakes in determining the coverage period
- Including independent contractors in loan calculations
- Spending funds on non-qualifying expenses
- Failing to account for the $100,000 employee salary cap
As long as you didn’t intentionally provide false information and made an effort to comply, minor errors shouldn’t necessarily disqualify you from full or partial forgiveness. However, you may have to repay any excess loan amount.
What to Do If You Discover a Mistake
If you realize you made a mistake on your PPP loan application, take action right away:
- Contact your lender. Explain the nature of the error and find out if they have submitted your application for SBA approval yet.
- If they haven’t submitted it, request to amend your application. If they already submitted it, you may have to wait and see if the SBA catches the error.
- If approved but you received too much funding, work to spend the full amount on qualifying expenses. If not possible, return unused funds to lender.
- If not approved due to an error, correct and resubmit your application if possible.
For more guidance, check out this Reddit thread from business owners discussing PPP application mistakes.
Maximize Chances for Correct Loan Amount
To avoid issues from the start, thoroughly prepare before submitting your PPP application:
- Carefully calculate payroll costs based on rules
- Gather all required supporting tax documents
- Review application for accuracy before submitting
- Consider having an accountant review calculations/documents
While honest mistakes won’t necessarily ruin your chances for forgiveness, putting in the work upfront will minimize errors and delays in getting your loan approved and forgiven.
For more help navigating PPP loan forgiveness with a prior mistake, connect with an attorney at Avvo.
The Bottom Line
If you made a good faith mistake on your PPP loan application, take a breath – it will be okay. Reach out to your lender as soon as possible and take reasonable steps to correct it. As long as you didn’t intentionally falsify information, your chance for full or partial forgiveness is still decent. Just act quickly and carefully moving forward.