By Michele Weaver, RCAC rural development specialist  

In April 2020, with the rise of a global pandemic, many self-help agencies found themselves forced to close their doors and stop construction. The Section 523 grant funds helped pay staff in the interim but like many organizations nationwide, self-help organizations scrambled to determine how to cover costs as their build time stretched further into the future than they had anticipated. The Payroll Protection Program (PPP) was introduced in April 2020 to mitigate the impact of COVID-19 on organizations. The PPP was applied for as a loan with the potential for full forgiveness if the funding was used for eligible purposes such as payroll, utility costs, payments of mortgage interest or rent, operation expenditures, supplier costs and worker protection expenditures. Although nonprofit organizations were and are ineligible for Small Business Administration (SBA) loans, they were eligible for the PPP loans, and it enabled some self-help grantees to subsidize the costs that they would incur by extending past their two-year budget plan.

The first thing you need to do is make sure that you’ve recorded the PPP funding correctly in your books.

SBA developed the PPP hastily and as a result, there were several gaps in procedures and guidelines. This means the process is constantly updating. The last deadline to fund both first and second draw PPP funds expired May 31, 2021. But if you were one of the fortunate organizations to obtain PPP funding you may be wondering what now? The first thing you need to do is make sure that you’ve recorded the PPP funding correctly in your books. The money should be recorded as a loan and treated as a liability until you receive forgiveness from your lender and the SBA. Expenses should be separate from your Section 523 funding just as any additional financial source might be handled.

PPP loan forgiveness

The PPP is initially a loan with a maximum of a 24-week coverage period, a 10-month interest deferral period with a five-year term, at 1 percent interest. This means you have 24 weeks to use the funds and 10 months from your disbursement date to apply for forgiveness. The good news is that most organizations can apply for PPP loan forgiveness using the short form. If your PPP loan was for $150,000 or less and you can certify that at least 60 percent of the money was used for payroll and the remaining percentage, up to 40 percent, was used for other eligible expenses, you are able to submit the 3508S form to your lender for forgiveness approval. Additionally, no supporting documentation is required upon submission to SBA, however, SBA does perform random audits and requests documentation so be sure you have it handy. Even after you’ve received forgiveness approval for your loan, the SBA has the right to audit your records for seven years. Failure to provide the information upon SBA’s request may result in a determination that your organization was ineligible for PPP funds.

If you have a larger loan, you’ll need to submit either the 3508EZ form or the 3508 form. Supporting documentation must be submitted with these applications. If your lender has opted-in to the Direct Forgiveness portal and your loan is less than $150,000, you may apply for forgiveness directly through SBA. You can make sure that you are using the most updated forgiveness form by going to the SBA’s website at

Your lender is responsible for due diligence and is allowed to require that you submit documentation with the 3508S form. When in doubt, call your lender and ask questions!