The Paycheck Protection Program (PPP) needs no introduction. It was (and continues to be) one of the most talked about topics arising out of the pandemic. Like others, the construction industry greatly benefited from the PPP and, now that most contractors have received their round 1 and round 2 forgiveness, now is the time to prepare for the PPP audit. Construction contractors expecting an audit should start to compile and centralize the information to support their case for necessity, usage and forgiveness of the PPP funds.
Clearly, your payroll records, union reports and backup of other qualified spend items need to be made available. But also understand how your loan base was calculated and what you considered within that math. At the early stages of the audit process, the SBA is questioning loan bases.
And while there is a strong financial condition component to these audits, the uncertainty at the time needs to be emphasized. Look to documentation of real-time conditions from the onset of the pandemic, including project shutdown notifications, board minutes/internal memos discussing management’s decisions to lay off employees, and any other impactful documents to help paint this picture.
This article is the first in the series, Top 5 Contractor Strategies for 2022, from Grassi’s Construction team.