It is coming up on time to start working on your PPP loan forgiveness paperwork. Loans were eligible for forgiveness beginning June 30, 2020. If your bank hasn’t already contacted you to start working on the paperwork, you most likely will hear from them shortly. If you are interested, HERE is another blog we wrote about the loan program and the rules for using the money provided.
Loan Forgiveness Forms
The first step on the road to loan forgiveness is finding the correct form to use for your company’s situation. There are two loan forgiveness forms available: The EZ form and the standard form. By the name you can tell the EZ form, it is more straightforward. If you qualify to use this form, please do so. To qualify to use it, you must meet the following criteria;
- You are self-employed and have no employees;
- The company did not reduce the salaries or wages of its employees by more than 25% and did not reduce the number of hours of its employees. Or
- Experienced reductions in business activity due to health directives related to COVID-19 and did not reduce the salaries or wages of their employees by more than 25%.
If these criteria do not apply to you and your company, you must use the standard form. It requires more math and more paperwork but is your only option for loan forgiveness.
Paperwork
The next step is to track down all the paperwork you will need to fill out the forms correctly. Fingers crossed you have been careful with your paperwork during this process and won’t have to search long and hard. You can discuss with your loan officer any question you have about what you need precisely. Below is the list of what you will need to find.
Payroll:
- Bank account statements or third-party payroll service provider reports documenting the amount of cash compensation paid to employees.
- Tax forms (or equivalent third-party payroll service provider reports) for the periods that overlap with the Covered Period:
- Payroll tax filings reported, or that will be reported, to the IRS (typically, Form 941); and
- State quarterly business and individual employee wage reporting and unemployment insurance tax filings are reported, or that will be reported to the relevant state.
- please note they do not have to be submitted for this application
- All payment receipts, canceled checks, or account statements documenting the amount of any employer contributions to employee health insurance and retirement plans. Included all that the Borrower included in the forgiveness amount
Nonpayroll Items:
- Any business mortgage interest payments. Copy of lender amortization schedule and receipts or canceled checks verifying eligible payments from the Covered Period. Or lender account statements from February 2020 and the months of the Covered Period through one month after the end of the Covered Period verifying interest amounts and eligible payments.
- Business rent or lease payments. Copy of current lease agreement and receipts or canceled checks verifying eligible payments from the Covered Period. You can also provide lessor account statements from February 2020 and the Covered Period through one month after the end of the Covered Period verifying eligible payments.
- Company utility payments. Copy of invoices from February 2020 and those paid during the Covered Period and receipts, canceled checks, or account statements verifying those eligible payments
For the Standard Application only, please include the following:
- The average number of FTE employees on payroll per week employed by the Borrower between February 15, 2019, and June 30, 2019.
- The average number of FTE employees on payroll per week employed by the Borrower between January 1, 2020, and February 29, 2020.
- In the case of a seasonal employer, the average number of FTE employees on payroll per week employed by the Borrower between February 15, 2019, and June 30, 2019; between January 1, 2020, and February 29, 2020; or any consecutive 12-week period between May 1, 2019, and September 15, 2019. (please see page 6 of the Standard instructions for more detail)
Returning the Information
Once you have completed your correct form and collected the necessary paperwork, you must return it to the bank and loan officer who processed your loan. After you have turned in your completed paperwork, the bank has 60 days to submit it to the SBA department. Once the SBA receives it, they have 90 days to decide on forgiveness. Then, you will get a notification of the decision. Remember that this is still a fluid situation (like the entire PPP situation), and things are regularly changing. While I don’t think forms or what paperwork is needed will vary, please be patient during the forgiveness process.
The purpose of the PPP was to help businesses stay afloat during this uncertain time. Everyone is learning as we go. None of us were alive during the last pandemic! Due to this, please don’t hesitate to ask any questions about the paperwork, the forms, or anything else about your loan. The loan officer who processes your loan is your best resource; they will know the details that are particular to your situation.