So, what are the requirements for the retention of PPP documentation? The SBA requires that PPP borrowers retain all related loan and forgiveness documents for 6 years after:
- The date of full forgiveness OR
- The date the loan is fully paid off if only partial forgiveness was achieved.
That’s a LONG time.
Here is what that entails for loans under $2 million:
- Documentation submitted with the PPP loan AND forgiveness application
- Payroll costs from the previous 12 months before applying AND during the 8-week Covered Period, which includes:
- Salary/wages paid to employees (capped at $100k annually for each employee)
- Health insurance premiums paid (if not taken out of the employees pay)
- Employer matching retirement expense
- State/local taxes assessed on employee wages (TWC/TXSUI for Texas dentists)
- Any documents from EIDL’s you received in 2020 (including the EIDL advances for PPP loans). Follow the details regarding Forgiveness Application documentation that was posted previously. To make life easier, make two copies when gathering all the required documents needed – one for submission and one for record retention.
- Documentation showing material compliance with PPP requirements
You are in PPP compliance if you:
- Keep up with the documentation described above
- Keep check stubs/receipts verifying you have been spending your loan on the required items (payroll, rent, mortgage, utilities)
- Can verify the certifications made on the original loan application, and
- Have not received a PPP loan twice for the same business if you applied to multiple banks
It wouldn’t hurt to review the loan documents from your PPP lender to make sure that the bank doesn’t require any sort of additional documentation for their records.
Keeping up with these items is vitally important for the next 6-7 years. While the SBA has indicated that their audit resources will be mostly dedicated to borrowers who have larger loans (over $2 million), the SBA has the authority and right to access and review the described items above for any PPP borrower during the 6 years.