The Paycheck Protection Program (PPP) was created to provide financial relief to U.S. businesses during the pandemic. By the time applications closed, more than 11.5 million businesses received a PPP loan. 

As a federally funded program, oversight has been integrated into its processes. Since most PPP loans were at least partially forgivable, the federal government and the Small Business Administration (SBA) needed to ensure funds were distributed, spent, and forgiven under the specified guidelines. 

This article will explain the different types of SBA reviews for PPP loans and what happens if your loan is chosen for review. We’ll also cover the SBA’s requirements for documentation, noting what you need to keep on file and for how long.

The SBA has not performed a detailed review on all PPP loans after forgiveness applications are submitted. Instead, a sample of PPP loans are selected for two types of reviews: 

Whether or not your loan is selected for review, the SBA has requirements for all borrowers who received a PPP loan and/or applied for or received forgiveness. There are two categories of requirements depending on your loan size: 

• $150,000 or less: The SBA requires that borrowers with loan amounts of $150,000 or less retain all employment records and payroll documentation for four (4) years and all other documentation for three (3) years after the date the loan forgiveness application is submitted. 
• Over $150,000: The SBA requires that borrowers with loan amounts over $150,000 retain all supporting documentation for six (6) years after the date the loan is forgiven or repaid in full.  

Make sure to calculate these required dates for your loan, mark them in your calendar, and retain all required documentation until the dates have passed. 

Businesses have up to 10 months from the end of their PPP loan’s covered period to submit an application for forgiveness, known as the Payment Deferral Period. After that deadline, PPP loan payments are no longer deferred and borrowers will begin making loan payments. Even if the 10 month deferral period has expired, borrowers can apply for forgiveness any time up to the maturity date of the loan. 

If you plan to apply for PPP loan forgiveness but haven’t yet, we recommend completing the process as soon as possible as most PPP loans are already past their deferral period.

If you received your PPP loan through NEWITY, you can easily complete your PPP forgiveness application in the Smart Portal. If the SBA ever chooses your loan for review, we’ll notify you, and be there to address any requests on your behalf.