2- Eligible payroll costs make up 60% or more of the forgiveness amount. The SBA will then release funds within 90 days. PPP Loan Forgiveness Calculation Form Coronavirus (COVID-19): Relief options and Additional Resources. Borrowers may also complete this application electronically through their Lender. However, if a borrower does not apply for loan forgiveness within 10 months after the last day of the borrower’s loan forgiveness covered period, loan payments are no longer deferred and the borrower must begin making payments on the loan. What happens is that the lender must make a decision within 60 days and submit documentation to the SBA. However, when you have an application submitted, you do not need to make payments until a decision has been made. Each form is for a different loan use circumstance. Applying for PPP Loan Forgiveness - Round One . Self-Employed (SP, freelancer, or contractor) without employees, Self-Employed with more than one PPP loan for multiple businesses, Form 1040, Schedule C (Single Member LLC ) OR Form 1065, Schedule K (Multi-Member), February 15th, 2019 to June 30th, 2019, (B1), January 1st, 2020 to February 29th, 2020. Technically, it is a financial institution of some kind that processes the PPP applications. If you do this, you will need to maintain full employment at full salary to maintain the maximum forgiveness amount. PPP Loan Forgiveness: Application, Rules & Requirements – The Complete Guide, https://www.finimpact.com/wp-content/uploads/2017/10/finimpact_weblogo.png, https://www.finimpact.com/wp-content/uploads/2020/12/ppp-loan-forgiveness.png, Recordkeeping Requirements for PPP Forgiveness. Smart, young students who are eager to help can only be a good thing. All borrowers must submit part 1 (PPP Loan Forgiveness Calculation Form) and 2 (PPP Schedule A). (Ignore reductions that arose from an inability to rehire individuals who were employees on February 15, 2020 if the Borrower was unable to hire similarly qualified employees for unfilled positions on or before December 31, 2020. In plain language, that means after using their loan, borrowers will have up to 10 months to apply for loan forgiveness without needing to make any payments on their loan. On May 15, the Small Business Administration (SBA) released the long-awaited Payroll Protection Program Forgiveness Application. The maximum loan amount available to borrow through the PPP is equal to 2.5 times the business’s average monthly payroll costs or $10 million, whichever amount is lower. PPP Loan Forgiveness Applications. Given that the purpose of the loan was to keep people employed, a business that didn’t reduce payroll is very likely to have its loan forgiven. For example, if the Borrower is using a 24-week Covered Period and received its PPP loan proceeds on Monday, April 20, the first day of the Covered Period is April 20 and the last day of the Covered Period is Sunday, October 4. However, if a borrower does not apply for loan forgiveness within 10 months after the last day of the borrower’s loan forgiveness covered period, loan payments are no longer deferred and the borrower must begin making payments on the loan. As a general partner in a partnership, your eligible compensation is based on your partnership 2019 net earnings. Initially, there was much worry about the financial safety net provided for Sole Proprietorships, freelancers, and independent contractors amidst the COVID-19 pandemic. You can apply for PPP loan forgiveness using the simple steps above. There is a specific forgiveness form to be filled out. For instance, if the figure is 0.8, then you will be entitled to 80% of the payroll expenses. Just make sure you have all of your documentation handy. The lender will give you notice of the total forgiveness amount that is submitted to the SBA. To claim eligibility for PPP loan forgiveness, 60% of the loan must be used for payroll costs. 3245-0407 Expiration date: 1 2/31 /202 0 A BORROWER MAY USE THIS FORM ONLY IF THE BORROWER RECEIVED A PPP LOAN OF $50,000 OR LESS. We use cookies in order to provide you with the best online experience. You will want documents and software at hand to assist in these calculations. The simplified form requires less documentation and calculations. This is the most complex step, and you will have to do a number of calculations to deduct what you are legitimately entitled to. Obviously, if you do not fill out the form and apply for forgiveness, then you will not qualify. Essentially, your total forgiveness amount is equal to payroll + rent + mortgage + utilities, once the same staffing levels were maintained during the COVID 19 pandemic. For example, a borrower whose covered period ends on October 30, 2020, has until August 30, 2021, to apply for forgiveness before loan repayment begins.”. The major stipulations for getting forgiveness on PPP are that you used the PPP for payroll, utilities, rent, and mortgage. If the expenses are not deducted, but forgiveness is not ultimately granted, the expenses can be deducted on the 2020 return, whether it be the original or an amended return. This table should be a major help so that you can quickly identify what forms are necessary, what the rules are, and how to satisfy them. Obviously, you will want to attain forgiveness on the loan as soon as possible. However, while PPP forgiveness is complex and arduous, EIDL Advance forgiveness is automatic and easier, though available to a lesser number of applicants. Grounds for Review . There are different forms and requirements for the various legal entity types. PPP Loan Forgiveness Application Form 3508 (standard) PPP Loan Forgiveness Form 3508 S (for loans less than $50,000) PPP Loan Forgiveness Application Form 3508 EZ (for businesses without employees) Payroll reports from your payroll provider; Payroll reports, federal payroll tax filings (Form 941, Form 1040, Form 1065 Schedule C, Schedule A, Schedule K1, etc), proof of benefits … If you put workers on reduced pay, you can pay them the full amount and claim forgiveness on it. Once everything is checked, the application decision is sent to the SBA, which then releases funds to the financial institutions, which sends it to the application/borrower. The loan could be used to cover payroll, rent, mortgage interest, and utilities. That is all that is required. The PPP took precedence as the main tool to assist small US-based businesses. You will have to submit more documentation to your lender than with the other forms, but it’s all stuff that you need to have on hand anyway. Your PPP loan forgiveness application must include documents that verify your payroll, full time employees, and non-payroll expenses. As mentioned in the previous step, applying for COVID PPP forgiveness is not a one-off step that you can easily complete. Form: Paycheck Protection Program Loan Forgiveness Application Form 3508EZ (treasury.gov), Instructions: PPP-Loan-Forgiveness-Application-Form-EZ-Instructions.pdf (treasury.gov).
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