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Why the PPP loan forgiveness process is so complicated and how to navigate it

The Paycheck Protection Program is convoluted, so WCNC Charlotte Defender Michelle Boudin investigated the difficult process local business owners are facing.

CHARLOTTE, N.C. — Many small businesses in the Carolinas are struggling to under the Paycheck Protection Program (PPP) loan program. 

Those who got the money in the first round are trying to navigate the forgiveness process, which turns the loan into a grant while others are hoping to get some money in the second round that just opened.

Before the COVID-19 pandemic rocked the world, the bar at Foxcroft Wine Co. was always packed with people. It was so popular, the owner, Conrad Hunter, opened more locations and even a speakeasy called Dot Dot Dot

Hunter remembers being very concerned about coronavirus in March.

"Much like everyone else, it started out as, 'Oh my God, what are we going to do now? Everything is shutting down.'"

RELATED: Business owners hope to take advantage as the second round of PPP opens

Hunter managed to get some PPP funds in 2020 which helped him keep most of his 104 employees. Now he, like so many business owners, is attempting to navigate the loan forgiveness process. He called it “tedious.” His accountant, Nesha Pai, is a bit blunter.

“It has been one hell of a process," Pai told WCNC Charlotte.

Pai, whose clients are all small businesses, said the PPP forgiveness process is seriously complicated for everyone.

“The banks are also scrambling to get answers," Pai explained. "Everyone is just scrambling.”

After months of back and forth, the latest word from Washington is businesses that got up to $150,000 from the PPP will only have to fill out a one-page affidavit and submit proof of their payroll.

Pai said that portion of the process should be fairly straightforward now, but the rest is still pretty complicated.

RELATED: More coronavirus relief on the way for small businesses

“Banks are hiring third parties to review the applications, and they’re also purchasing third-party software that has a lot of kinks in it," Pai said. "It took me no shorter than a four-week period back and forth with the banks because of a lot of issues with the platform.”

That’s precious time she knows her clients don’t have.

“It’s an unfair situation having to apply for forgiveness when they are just trying to stay afloat," Pai emphasized. "They don’t have time to do admin work. They’re trying to run their business.”

WATCH: Nesha Pai explains how to navigate the PPP loan forgiveness process and how to take your PPP loan as a tax deduction

On Jan. 13, the Small Business Administration (SBA) opened up the second round of PPP loans.

If you’re interested in applying for a new PPP loan, check out SBA's website explaining the process.

But the recently opened PPP loan process will run until the money runs out so apply as soon as possible.

RELATED: Federal checks salvage otherwise dreadful 2020 for US farms

Pai recommends having all your relevant files ready before you apply since the application will request your 941 tax forms, payroll journals and possibly even your lease. Banks can provide lists of what's required for the PPP application if needed. 

Also, Pai noted PPP expenses are tax-deductible, so business owners shouldn't get taxed on the loan they receive as long as it's considered a grant.