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3 Lessons On Canceling P3 Loans From Small Business Owners

By Kelsey Sheehy | Nerdwallet

Despite the confusion, delays and headaches that many small business owners have endured in obtaining a Paycheck Protection Program loan, remitting the balance can be surprisingly simple and refreshing.

“Honestly, the whole process was incredibly simple and straightforward,” says Jill Draper, owner of Jill Draper Makes Stuff, a yarn store in upstate New York. “The bank sent in a DocuSign form and almost everything was filled out automatically.”

She simply checked a few boxes to indicate how she spent her loan of $ 9,100, the first of two P3 loans she received. About 10 days later, she received the email: Her loan was completely canceled.

Draper’s experience is no accident.

Bethany Rusen, founder and director of Black Hound Clay Studio in Philadelphia, saw her first PPP loan ($ 9,789) canceled on March 5, 2021.

“It was really, really easy,” says Rusen. “It was basically me downloading all of the content from my payroll processor.”

Ciara Pressler, founder of Pregame, a business coaching and consulting firm, admits that she initially postponed her request to forgive her $ 3,002 PPP loan.

“I kept pushing because I was afraid it was a big process with a lot of documentation,” Pressler says. This was not the case. “It was such a quick and easy process that I could have done it right away. It only took a few minutes.

Draper, Rusen, and Pressler have different business structures – Sole Proprietorship, LLC, and S corporation – and have used different types of lenders – credit union, big bank, and non-bank lender – but there are a few commonalities that made the cancellation transparent PPP loan.

First, their loans were less than $ 150,000. Borrowers with loans in this range do not need to show receipts. In most cases, all you need to do is check a box indicating that you have complied with the PPP requirements for salary costs and eligible expenses. (You must also show the qualifying loss of income for the Second Drawdown Loans.)

The vast majority of PPP borrowers belong to this group. Of the nearly 6.7 million PPP loans issued in 2021, 95% were for $ 150,000 or less. In 2020, 87% of all P3 loans were $ 150,000 or less.

While you cannot control your loan amount – it depends on a formula from the US Small Business Administration – you can control other factors to make it easier to cancel the loan.

1. Relationships matter

Pressler’s PPP loan was made through Chase, where she has her corporate checking account and is based on her investment banker’s first name (she was even at a book club with the one of his bankers).

That connection made all the difference when applying for and remitting her loan. She had her banker’s ear, when she was entitled to a few thousand dollars at a time when Chase was issuing PPP loans of over $ 100,000 on average.

Draper’s relationship with his lender, Hudson Valley Credit Union, dates back over a decade. This allowed him to have an “easy back and forth” with his banker from start to forgiveness.

2. Keep a Covid file

When the pandemic closed his studio, Rusen launched a Covid-19 file to store all relevant information.

“I have a ceramic MFA; I’m not a very business-oriented person when it comes to keeping track of those little details, ”she says. “Keeping it all in one place was really helpful to me because I could easily find things without endlessly searching in multiple places. “

Draper did the same, creating special files (digital and paper) with copies and scans to document how every penny of his P3 loan was spent. She didn’t need to provide these documents for her loan cancellation, thanks to the simplified application, but she has them on hand if the loan is audited.

3. Any questions? Rely on experts

As questions arise, and they will turn to the professionals – your accountant, your lender, and the SBA – rather than chair experts online.

“There is so much information, and on social media it has been like over the phone,” says Draper. “It helps to know exactly what’s going on with a third-party account on Twitter. “

Confused about the terms of forgiveness or struggling with an unresponsive lender? The SBA offers webinars and advisors to help you in all things P3s.

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Kelsey Sheehy writes for NerdWallet. E-mail: ksheehy@nerdwallet.com.

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