Answers to the top 5 questions related to PPP Loan forgiveness
We’ve been getting a lot of requests for information regarding applying for the PPP Loan Forgiveness, so we decided to answer the top five questions on our blog and share important information regarding what you should be expecting in the following months.
The Paycheck Protection Program (PPP) ended on May 31st, 2021. Although funds were exhausted on May 4th for most lenders. As of today, all lenders are still finalizing their portal access to begin taking applications for loan forgiveness.
1. What can impact the loan forgiveness amount?
· Your Loan Forgiveness will be reduced if they money spent on expenses other than payroll, business rent, interest on business mortgage, business utilities, covered supplier cost, covered worker protection expenditures. At least 60% must be spend on payroll.
· Your loan forgiveness may also reduce if you decrease your full-time equivalent (FTE) head count during your 8- or 24-week period.
· Your Loan forgiveness may also be reduced if you decrease annual salaries or hourly base wages by more than 25% for any employee or hourly base wages by more than 25% for any employee that made less than $100,000. Annualized in 2020.
2. When do I need apply for forgiveness?
Based on the PPP Flexibility Act passed in June, you have 10 months from the end of your 24-week period to apply for forgiveness before payments star to become due.
PPP Loan Forgiveness Process
PPP Loan Forgiveness Process
3. What do I need to Apply for Forgiveness?
Proof of all amounts spend with PPP money, including payroll reports, bank statements, proof of rent/utilities, etc.
The support needed to apply for forgiveness depends, in part, on which application you are able to use based on the loan amount you received.
4. What are the correct forms to complete?
Contact your PPP lender and complete the correct form. Your lender can provide you with either the SBA Form 3508, SBA Form 3508EZ, SBA Form 3508S, or a lender equivalent.
The 3508EZ and the 3508S are shortened versions of the application for borrowers who meet specific requirements. Your lender can provide further guidance on how to submit the application.
5. So, when should you apply?
It depends on your specific situation.
· For most waiting is not going to negatively impact you, especially if you have a loan under $150,000.
· However, if you need to lay off employees between now and the end of the year you may be better off applying earlier.
· Wait for your bank/lender to officially invite you to apply for the loan forgiveness application.
If you have more questions or need help, contact us so we can discuss what you need to know before you submit your Loan Forgiveness Application.
**DISCLAIMER: This blog is meant for educational purposes only. This is not to be relied on or considered a substitute for advice on your specific situation from your tax advisor.