Paycheck Protection Program Round 2: The Highlights
After much deliberation, Congress finally agreed to approve a $900 billion COVID-19 relief package as part of the Consolidated Appropriations Act, 2021. Included in that amount is $284 billion for a second round of the Paycheck Protection Program (PPP).
PPP Loan Forgiveness Form and Instructions
Overview from the Journal of Accountancy: New PPP loan forgiveness applications
- Revised PPP Loan Forgiveness Application (3508) and instructions
- EZ PPP Loan Forgiveness Application (3508EZ) and instructions
Template Furlough Recall Letter
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
Keeping Track Of Expenses/Loan Forgiveness
If you have received a PPP loan, you need to track specific activities in order to ensure loan forgiveness.
Loan forgiveness applications will be due based on the date your date funded. Your date is 24 weeks from when your PPP loan funded unless you choose to use the original 8 week period. You are encouraged to apply for forgiveness once your funds are fully utilized. 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 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 60% 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. Please see guidance for other owner non-cash compensation that is not allowed. You now have until December 31, 2020 to rehire employees under the “safe harbor” rules.
- Use the remaining 40% 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 5 years to pay it off at 1% with an initial 6-month deferment period (payment deferral may be extended to when SBA compensates the lender for forgiveness amounts). If you received your loan prior to June 5, 2020, you will need to contact your lender to ask for an extension from the original 2-year repayment period.
- You have 10 months after your covered period ends to apply for forgiveness.
NFIB PPP Loan Forgiveness GuidanceNFIB-PPP-Loan-Forgiveness
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