PPP loan forgiveness

Paycheck Protection Program Loan Forgiveness

2020 has been a struggle for many businesses due to COVID-19. The Paycheck Protection Program was created to provide relief for businesses facing hardship. If you received a PPP loan, we have provided some important things to consider before you apply for loan forgiveness. Banks are starting the process, which can take up to 6 months after you complete your application.

To qualify for loan forgiveness, you must meet the following minimum requirements over the 8- or 24-week period after receiving the loan:

• Minimum 60% of funds paid for payroll costs

  1. Salary, wages, commissions, or tips (capped at $100,000 on an annualized basis for each employee).

  2. Employee benefits including costs for vacation, parental, family, medical, or sick leave; allowance for separation or dismissal; payments required for the provisions of group health care benefits including insurance premiums; and payment of any retirement benefit.

  3. State and local taxes assessed on compensation

  4. For a sole proprietor or independent contractor: wages, commissions, income, or net earnings from self-employment, capped at $100,000 on an annualized basis for each employee.

  5. All funds could be used for qualifying payroll costs. Meaning you used 100% of your loan towards qualifying payroll. With the new 24 week period this is where most recipients will fall.

• If you didn’t use all your funds on qualifying payroll, the remaining funds, above 60% of payroll, may have been used for the following business expenses:

  1. Utilities

  2. Rent

  3. Interest on mortgages related to real property

The SBA released a Paycheck Protection Program Loan Forgiveness Application Form 3508EZ for certain PPP borrowers. This was meant to simplify the application/forgiveness process. You can go through this checklist to see if you qualify:  PPP Loan Forgiveness Instructions

The current 3508EZ PPP Application - PPP Loan Forgiveness Application – Form 3508EZ

Any business that received an EIDL advance would reduce the forgivable amount of the PPP Loan. However, the EIDL advance does not need to be paid back if it was used for qualified operating expenses.  If additional EIDL funds were received other the $10,000 advance, that is not forgivable.

There are some provisions and limits depending on the structure of your business and the timing of expenses. The most recent Frequently Ask Questions released on PPP Loan Forgiveness can be found at PPP Loan Forgiveness FAQs

Contact us if you would like to discuss your options and any questions you may have about loan forgiveness.