Keeping Track Of Expenses
If you have received a PPP loan, you need to track specific activities in order to ensure loan forgiveness.
Loan forgiveness application will start being due by June 30th 2020. Your date is 8 weeks from when your PPP loan funded. It is critical that you have documentation in place to satisfy these requirements.
The application will be provided by your bank. Please note the guidelines below are subject to change based on additional legislation or clarification of existing legislation.
What You Need To Know
- Make sure your business truly qualifies for and needs PPP Funding. If you received a loan for under $2M, you are covered under the safe harbor rule and your loan was deemed necessary.
- You must use at least 75% for payroll expenses. You must pay employees at current compensation levels without reductions to wages or headcount and satisfy employee head count requirements. Independent contractors/business owners can pay themselves 8/52 of earnings.
- Use the remaining 25% for other qualified expenses. These can include mortgage interest, rent or lease payments, utilities and transportation costs for contracts in place prior to Feb 15, 2020.
- Keep detailed records. This includes documentation for
- Verifying FTE employees on payroll
- Employee pay rates
- Payment verification for covered expenses
- Any other covered expenses.
You will be required to certify the documentation is all true and accurate.
- If you are not approved for 100% forgiveness, you have 2 years to pay it off at 1% with an initial 6-month deferment period.
NFIB PPP Loan Forgiveness GuidanceNFIB-PPP-Loan-Forgiveness
PPP Loan Forgiveness Form and Instructions3245-0407-SBA-Form-3508-PPP-Forgiveness-Application
10 Takeways On The PPP Loan Forgiveness Application
This articles covers the following
- Alternative payroll covered period
- Payroll costs (paid versus incurred)
- Non-payroll costs (paid versus incurred)
- Personal property included
- FTE defined
- Baseline FTE
- Potential number of FTE calculations
- FTE safe harbor
- Payroll reduction clarification
What you need to submit your PPP Loan Forgiveness Application
With the moving target that is the details on the SBA’s Payroll Protection Program, it should come as little surprise clients that were able to get it now wonder if they have to pay it back, or how much. To offer some relief, our contributor tax practice owner Susan Tinel, EA offers her insights on filling out the PPP Loan Forgiveness Application.
- PPP Loan Forgiveness Calculation Form
- PPP Schedule A
- PPP Schedule A Worksheet
- PPP Borrower Demographic Information Form (Optional)
- Importand notes
- Moving Deadline