Daniel R. Alcott, Esq. Partner & Chair Not-for-Profit Department, Dorf & Nelson LLP: If your not-for-profit organization received a PPP loan, it would have been required to certify to the Small Business Association that current economic uncertainty made the loan request necessary to support its ongoing operations.
The Treasury Secretary recently expressed concern that some organizations applied for, and received, PPP loans that should not have because they had adequate other resources. The following is some of the information you should be documenting to show that your organization needed the PPP loan at the time it applied. By keeping records of these things, you can help protect your organization in the event of a government audit:
- Describe your organization’s economic situation at the time of your loan application.
- Identify all sources of available cash, including unrestricted reserves and untapped credit at the time of the loan application.
- Forecast your future operations, with and without the PPP loan, from the date of the loan application through June 30, 2020 and through December 31, 2020.
- Compare current year activity through the date of application with prior-year activity for the same period.
Note that the items listed above are only some of the types of information you should identify. Of course, every organization is different, and a determination of risk should be considered on an individualized basis. If you are concerned about your organization’s readiness to undertake an audit, or if you want additional information concerning the consequences of receiving your PPP loan, please feel free to reach out to: Daniel R. Alcott, Esq. at firstname.lastname@example.org