Paycheck Protection Program Loan Forgiveness Application
Many of you have taken advantage of the Payroll Protection Program (PPP) to help cover your business expenses due to COVID-19, and we have been happy to help you navigate through that process. Now that you have received and utilized the funds, the next step is forgiveness of the loan.
Recently, the SBA and the Treasury Department issued guidance on the forgiveness of the PPP Loans as well as the application and necessary documentation. Note that this is the first draft, and changes are likely.
The period to apply for forgiveness begins on July 1, 2020. Your lender will be reaching out to you to provide instructions, as they may vary from lender to lender. After your application has been submitted, your lender is required by law to provide you with a response within 60 days.
In the meantime, we have compiled the below list of information you will need:
Payroll summary reports showing numbers of employees and pay
Payroll tax filings (Form 941)
Income, payroll, and unemployment insurance filings from your state
Documentation verifying any retirement and health insurance contributions
Documentation verifying your eligible interest, rent and utility payments
Documented verification that eligible interest, rent and utilities were active in February 2020
If you are a sole proprietor (file a schedule C) you can take 8 weeks of your loan forgiveness as replacement for lost profit. You will just need to provide a copy of your schedule C for 2019 showing profit so a weekly average can be determined. You will need to provide documentation showing the remaining loan was used for mortgage interest, rent, lease and utility payments.
If at first, you are not forgiven you will be allowed to provide additional information and appeal the decision. Any amount of the loan that is not forgiven will become a 2-year loan with a 1% interest rate. The loan balance can also be repaid at any time with no additional fees.
The 8-week time period for the covered loans starts the day you received the funds in the bank - not the date you applied for the loan. You do not need to adjust your payroll schedule. The payroll costs are for items accrued over the 8 weeks. If you do not believe you will meet the payroll costs or employee head count requirements for the loan, please contact us to discuss the details.
We are keeping up to date on the details and guidelines of this program. If you have any questions, remember that we are here to help!