Monthly Archive December 26, 2020

PPP Loan Forgiveness: How to Apply and Get Accepted

Loan Forgiveness Application forms were amended to conform to the Economic Aid Act, including section 307, which requires a simplified forgiveness application for loans of not more than $150,000. To receive loan forgiveness, a borrower must complete and submit the Loan Forgiveness Application to its lender . This alternative period only applies to payroll costs—all other forgivable expenses must be made within the original covered period.

Per SBA guidance, if you use PPP funds for unauthorized purposes, the SBA will direct you to repay those amounts. If you, one of your shareholders, members, or partners knowingly uses PPP funds for unauthorized purposes, the SBA will very likely take recourse, which could include charges for fraud. Please consult tax, legal or accounting advisors for professional advice. Documentation that the expenditures were used by the Borrower to comply with applicable COVID-19 guidance during the covered period. The SBA has also issued various FAQs that directly or indirectly address elements of loan forgiveness as set forth on the U.S. Find the employee in question in the report, and note the “average hourly wage” on that pay stub.

NH Municipal Employers: Preparing for the Financial Impacts of COVID-19

If you choose the 8-week covered period, then your “owner compensation replacement” will equal 8 weeks worth (8/52) of your 2019 net profit, capped at $15,385. If you choose the 24-week covered period , then your “owner compensation replacement” will equal 2.5 months worth (2.5/12) of your 2019 net profit, capped at $20,833. You do not need to show documentation of how you spent these funds, just that you had this net profit in 2019 (e.g., with a 2019 Form 1040 Schedule C).

We have updated our online forgiveness application portal for these new forms, and are processing these applications. Business owners who own more than 20% of the business, and/or employees who have received documented permission from the principal are eligible to fill out and submit the loan forgiveness application. Under section 206 of the Taxpayer Certainty and Disaster Tax Relief Act of 2020, an employer that is eligible for the employee retention credit can claim the ERC even if the employer has received a Small Business Interruption Loan under the Paycheck Protection Program .

Bank account statements or third-party payroll service provider reports documenting the amount of cash compensation paid to employees. The SBA has not provided any process for amending submitted forgiveness applications. If the SBA denies forgiveness, in whole or in part, you will have an opportunity to appeal their decision. This will require that you hire an attorney, but it is unclear whether you will be able to amend your application at that time or simply to appeal their decision based solely on the information already submitted. We will review and process your application within 60 days after the completed application and required documents have been submitted. Once we submit your completed and signed application to the SBA, they may take up to 90 days to render their final decision and send us any applicable funds for forgiveness.

There’s nothing that says a self employed person who pays themselves has to do so on a specific schedule. Arthur – if you applied through SBA.gov that was the Economic Injury Disaster Loan not PPP. (The EIDL grant though does not have to be repaid.) If you applied for PPP then you applied through a lender and you’ll need to contact your lender to apply for forgiveness. Borrowers who remain partially or fully closed through the end of 2020 and therefore do not satisfy the FTE requirement for loan forgiveness have two new safe harbors. The loan forgiveness amount won’t be reduced if the failure resulted from an inability to hire people with similar qualifications by December 31, 2020. Similarly, the amount won’t be reduced if the failure resulted because the business wasn’t able to return to its pre-February 15, 2020 level of activity because of certain federal employee/customer safety requirements.

The types of businesses and industries that are eligible for PPP loans have been expanded under the new bill. Additionally, businesses that can demonstrate at least 25% reduction in gross receipts year over year and meet other requirements may be eligible for a second PPP loan. Once the forgiveness module has been activated, you will complete the entire application online through a series of questions and sections where you can upload documentation.

Last updated: Sept 30, 2020- Potential forgiveness changes and their impact on loan forgiveness

You can access the application yourself here, though your PPP lender may have a digital copy of this document for you to fill out when it’s time to begin the forgiveness process. There are different forms and documentation requirements for forgiveness of PPP loans of more $150,000.

• If you received an EIDL advance and are unsure of next steps, please contact your Loan Forgiveness Consultant.
• Most borrowers will be able to use either the EZ or 3508S application, but you should be absolutely sure which ones applies to you before you start.Our online application system will help you decide which one to use.
• If you received your loan prior to December 27, 2020, the Covered Period can’t go past December 31, 2020.
• You have 10 months after the end of your maximum loan forgiveness covered period to apply for loan forgiveness before you have to start repaying your loan.
• You must apply through the lender that made the PPP loan unless they sold the loan.

Step by step guidance about how to apply, required documentation and FAQs. Use the initial date of disbursement as the start date for your covered period. Business utility payments are payments made for the distribution of electricity, gas, water, transportation, telephone or internet access. Find more details on first and second draw PPP loans, eligibility, documentation and more. As part of our reopened application process, our team of experts will be standing by ready to help you if you need it.

MY LOAN

Payroll costs are considered paid on the day that paychecks are distributed or the Borrower originates an ACH credit transaction. Payroll costs are considered incurred on the day that the employee’s pay is earned. Payroll costs incurred but not paid during the Borrower’s last pay period of the Covered Period or Alternative Payroll Covered Period are eligible for forgiveness if paid on or before the next regular payroll date. Otherwise, payroll costs must be paid during the Covered Period or Alternative Payroll Covered Period. For each individual employee, the total amount of cash compensation eligible for forgiveness may not exceed an annual salary of $100,000, as prorated for the covered period. Count payroll costs that were both paid and incurred only once. For information on what qualifies as payroll costs, see Interim Final Rule on Paycheck Protection Program posted on April 2, 2020 .

• The individual will be required to authenticate their identity as part of the signing process.
• Access your application via email or on your online Square Dashboard.
• If your loan proceeds exceed the above amounts for “owner compensation replacement”, you will need to show documentation that the excess was spent on eligible non-payroll costs in order for it to be eligible for forgiveness.
• The Authorized signer will receive an email with a copy of their signed form.
• To fill out the application, we find it easier not to start at the beginning.
• There are Safe Harbor exceptions which may still allow you to receive full forgiveness even if you reduced employees, hours worked or wages.

Any FTE reductions in these cases do not reduce the borrower’s loan forgiveness. You apply for forgiveness with your lender and provide required documentation. Under the Flexibility Act, payments are deferred until the SBA has made a final decision on your forgiveness application and sent that amount to Truist. 24-week Covered Period- The pay can’t exceed the lesser of 2.5 months of the 2019 compensation for any owner-employee or self-employed individual/general partner or $20,833 per individual. 8-week Covered Period- The pay can’t exceed the lesser of 8 weeks of the 2019 compensation for any owner-employee or self-employed individual/general partner or $15,385 per individual. This program rewards borrowers that hire back workers who may have been laid off.

What are the general questions about the Loan Forgiveness process?

For self-employed individuals that file Form 1040, Schedule F and have employees, the difference between gross income and employee payroll costs may be used. For self-employed individuals, including Schedule C or F filers, retirement and health, life, disability, vision, or dental insurance contributions are included in their net self-employment income and therefore cannot be separately added to their payroll calculation. On January 19, 2021, the SBA revised the 3 different versions of the PPP Loan Forgiveness application. Each is application is designed to serve a different business situation and, for many borrowers, may streamline the steps to forgiveness. The forms can be used for either a first draw or second draw PPP loans. However, you must apply for loan forgiveness on your first draw loan before or at the same time that you apply for loan forgiveness on your second draw loan. We generally suggest that borrowers extend their covered period in order to maximize forgiveness using wages alone before they start adding non-wage and non-payroll expenses because it greatly simplifies the documentation process and reduces the likelihood of questions.

We’re only accepting applications through the PPP Client Portal. If you received an EIDL advance and are unsure of next steps, please contact your Loan Forgiveness Consultant. Such Third-Party Website’s owner/operator may be regulated by governmental entities and laws that are different than those that regulate M&T. M&T is dedicated to investing in the growth and sustainability of the clients and businesses we serve, attracting and retaining diverse colleagues so we can truly reflect our communities. Explore insights for personal, small business and commercial banking customers. Please note that we are anticipating additional SBA guidance regarding the above. Audited quarterly financial statements – If your financial statements have not been audited, you must sign and date the first page of the financial statement and initial all other pages to attest to their accuracy.

Paycheck Protection Program FAQ

The hours of employees who work less than 40 hours are calculated as proportions of a single full-time equivalent employee and aggregated. This is the guidance that we expected after the enactment of the Consolidated Appropriations Act, 2021 ‎‎(“2021 Appropriations Act”) on December 27, 2020. It is important to note that if you and your affiliates took more than one PPP loan for more than one business, you cannot use the 3508S application if those loans total more than $2 million for either the first or the second round. It will also help you upload the required documentation, let us review what you’ve submitted, allow you to sign it electronically and automatically submit your application to the SBA. State quarterly business and individual employee wage reporting and unemployment insurance tax filings reported, or that will be reported, to the relevant state. If you are not eligible to complete form 3508S or 3508EZ, you are required to apply using the standard application.

If you are not comfortable with this process, get help from your accountant or financial advisor. We recognize that it continues to be a difficult time for small businesses and we are working hard to support you. We invite you to learn more about Pursuit’s products and uses here.

Enter information in Table 1 for employees you paid at an annualized rate of less than or equal to $100,000 on all pay periods in 2019. In short, these exceptions Forgiveness Application and safe harbors protect you from taking a hit on loan forgiveness for a reduction in work staff that was unrelated to the inability to pay wages.

The most common submission error for forgiveness applications is EIN/SSN Mismatch between the forgiveness application and your PPP loan application. Please review your PPP loan application and your PPP forgiveness application and be prepared to help us understand any typos or inconsistencies between the documents, if applicable.

The bottom line is that, while the PPP forgiveness process still has some details that need to be worked out, we are now gaining more clarity by the day. Review the application now, before it’s time to apply, so you’re familiar with everything you’ll need to do to receive full or partial forgiveness as soon as possible. Your covered period, therefore, will likely be from the day you receive your loan to eight weeks, or 56 days, later. In the SBA’s press release announcing the application, the department noted that additional regulations and guidance “to further assist borrowers as they complete their applications, and to provide lenders with guidance on their responsibilities” is forthcoming. The SBA released the official PPP forgiveness application on its website.

Eligible customers can find the application on the Capital section of their Square Dashboard. Waiting to see if Congress passes this bill is beneficial so you can qualify for the maximum forgiveness possible, which includes both eligible loan amount and any interest accrued on that amount. You’re about to open a third-party website in a separate browser window. The site you are https://quickbooks-payroll.org/ about to enter may be less secure and may have a privacy statement that differs from Frost. The products and services offered on this third party website are not provided or guaranteed by Frost. A 2019 OR 2020 document should be submitted for First Draw PPP loans made in 2021 and Second Draw loans. A 2019 document should be submitted for First Draw PPP loans made in 2020.

As you follow along here, note that we have copied actual fields and their instructions from the SBA application. Tips in italics below those fields are our comments, based on our understanding of the current guidance. Another term you’ll see throughout the application is “FTE,” which stands for Full-time Equivalent or Full-time Equivalency. This is a calculation based on the number of hours an employee works.

Filling Out the PPP Loan Forgiveness Calculation Form

The minimum payroll cost amount is 60% of the forgivable amount, meaning up to 40% of the forgiven amount can be non-payroll costs like certain rent and utilities. We’ll email you when it’s time to apply for forgiveness for your 2021 loan.

If all your employees were paid at least 75% of their original pay , check the box and enter 0. Also do not include anyone who received an annualized pay rate of more than $100,000 in 2019. If you have multiple businesses and multiple PPP loans, you will have more than one E-tran number.

You do not need to report any expenses you don’t want to claim for forgiveness. We understand loan forgiveness for your Paycheck Protection Program loan is important to your business. This site will help you prepare for PPP loan forgiveness and we encourage you to review the information before you apply for loan forgiveness.

Paycheck Protection Program Loan Forgiveness

What do we need to provide the bank to help explain why we could not use the loan immediately starting the first week of the covered period to pay staff because the mall was closed. As a result of the mentioned reasons, we were eventually only able to use 50% from the 60% portion of loan proceeds towards payroll. Since we continued to pay rents and utilities while the mall was closed, can we use full 40% portion of the loan proceeds to get forgiveness for rents and utilities paid during the covered period even though the 60% portion of the loan proceeds was not used fully. No, the amount of loan forgiveness requested for nonpayroll costs may not include any amount attributable to the business operation of a tenant or sub-tenant of the PPP borrower or, for home-based businesses, household expenses. You will owe money when your loan is due if you use the loan amount for anything other than payroll costs, mortgage interest, rent, and utilities payments over the 8 weeks after getting the loan. Due to likely high subscription, it is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs. You will also owe money if you do not maintain your staff and payroll.