PPP: Why You Shouldn’t Complete the Forgiveness Application


We’ve had several clients ask recently about the PPP loan forgiveness application. When are applications due? Have I missed the application form? Can The Fitness CPA complete it?

We can understand the urge to put the rollercoaster of the Paycheck Protection Program firmly in the past. But our answers to the questions are simply:

The application isn’t due until mid-2021.

You haven’t missed anything.

No, we do not recommend any business owner or accountant filling in the loan forgiveness application at this time. 

Not only do we think you won’t have to pay back any of your PPP funds (!), but we also have a strong inkling that most of you will not have to complete the PPP loan forgiveness application process at all.

If you’re curious about the details, keep reading.


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Paying Back Paycheck Protection Program Funds

If you’re a fitness business still open in 2020, chances are that you’ve already taken advantage of the Paycheck Protection Program (PPP) and received thousands of dollars in much-needed funds.

If you haven’t applied for PPP yet, we recommend reading through our notes and getting your application in quickly. PPP applications officially close on August 8th. It will provide a healthy buffer to sustain your business throughout the next several months of continued COVID-19 uncertainty. We can convince you more over on our detailed post, here.

For those of you who have already applied, there have been a few changes made to the Paycheck Protection Program since its inception back in March. After the rollercoaster process that it was – limited applications, limited funds, big business greed – we finally have good news to share.

Virtually everyone reading this blog will qualify for 100% loan forgiveness. Meaning, there’s a very good chance you won’t have to pay any of the funds back.

How good is that?


New PPP Loan Forgiveness Criteria


Originally, the criteria for loan forgiveness was pretty strict. You had to spend 75% of the PPP funds on payroll and do so within 8 weeks. With many gyms unable to even open the doors within 8 weeks, much less bring on full staff, these criteria were hardly realistic.

As time has passed, both Congress and the U.S. Treasury have passed laws, and interpretations of the laws, that have made it much easier for business owners to qualify for full forgiveness of the loans.

For starters:

  • Only 60% of your PPP money needs to be spent on payroll now
  • You have 24 weeks from the date you received your PPP funds to do so

That means you have the better part of 6 months to use 60% of the funds on payroll. It’s a sufficient amount of time to use just over half of your allocated funds to pay employees. The remaining 40% of funds can be used on other business expenses, such as rent or utility bills.

If you were one of the very first successful applicants for the PPP program, this puts the deadline around October. If you were successful after the second wave of PPP funds were released, like many of our clients, the goal post is around November.

Exceptions to the Rule

There are exceptions, of course. Gyms who have yet to open and don’t expect to within the 24-week timeframe and gyms with large owner salaries will have a harder time meeting the forgiveness criteria.

Additionally, if you also received an Economic Injury Disaster Loan (EIDL) grant as well as a PPP loan, you will have to pay back PPP funds to the amount of the EIDL grant you received. You can get in touch with us here or ask your CPA if you have further questions on this.

However, most of you will qualify for 100% loan forgiveness of PPP funds.


How the Loan Forgiveness Process Works


As of just last week (end of July), online fintech lending companies such as Lendio and Kabbage have begun sending out forgiveness application forms to business owners.

These applications forms have been around since early July, however the banks have not been prepared to receive them. Long awaited FAQs are still needed to clarify a few issues and banks did not have the infrastructure or tools setup to properly process the applications…until now.

However, we do not recommend you submit the loan forgiveness application at this moment. Even if you receive an application form from your lender, we don’t recommend filling it out.

There are several reasons why we suggest holding off.

We have reason to believe that the loan forgiveness application process will be waived in its entirety for PPP loans under $150,000, due to recent recommendations by U.S. Treasury Secretary Steven Mnuchin and AICPA pressure.



PPP Loan Forgiveness Application
Photo: NBC News

Loan Application Process – Waived?

The U.S. Treasury Secretary wants to minimize the risk of fraudulent loans floating around before making a final decision, however he aims to make it easier for taxpayers to receive the forgiveness.

Not only taxpayers, but making it easier for every organization involved in the PPP forgiveness process.

As you’ve heard in the news, the largest monetary chunks of PPP funds were dispersed to million- and billion-dollar companies. However, 70% of the volume of loans distributed were given to small business borrowers at amounts of $150,000 or less.   

That’s a large number of applications that the federal government will not want to spend time auditing; banks will not want to spend time processing; accountants will not want to spend time working; and taxpayers will not want to pay their accountants for.

For our clients at The Fitness CPA, we estimated the loan forgiveness application to take upwards of 10 hours to complete.

They have since released an EZ form which is significantly less work, however it still includes small catches that will require 3-4 hours of work for any CPA. Many more hours for the average taxpayer.

Therefore, Congress and the U.S. Treasury are strongly considering “rubberstamping” loans of ~$150,000 or less. Meaning, letting those application processes go.

That’s why we strongly recommend holding off on the loan forgiveness application for now.

With so much uncertainty in the air, there are only benefits to waiting it out. The loan forgiveness application is not due until 10 months after your 24-week period is complete anyway.

Meaning, the loan forgiveness application is not due until the second half of 2021.

By September or October of this year, we will see movement by Congress or the U.S. Treasury to give us better clarity on this process. We expect the loan forgiveness process to be relaxed even further.


ppp loan forgiveness applicationIn Plain Terms?

Don’t respond to your bank regarding the loan forgiveness application at this moment and definitely don’t pay an accountant to complete it. Wait it out.

We know it’s frustrating. Many of us are running out of patience in the environment we’re in and it can be tempting to tick PPP off of your to-do list once and for all.

But be patient. Don’t pay for the work to be done just yet. If, and when, Congress make these changes to rubberstamp the loans, you’ll know that you got the best advice and didn’t waste time or money going through the process prematurely.

We’ll let you know as soon as we hear a final word on the loan application process. In the meantime, get in touch with us if you have any questions. We’re always here to help.

Until next time.

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1 thoughts on “PPP: Why You Shouldn’t Complete the Forgiveness Application

  1. Pingback: How to Get PPP Round 2.0 Money and Government Help for Your Health Club – Wellness world

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