PPP 101 loan forgiveness
By Jeff Laboe, CPA
Be aware that the information available today is different from what it was four months ago and will most likely be different in two months, so keep that in mind as you read this article.
With all the uncertainty these days, the last thing taxpayers should worry about is how to complete the Paycheck Protection Program loan forgiveness application. The purpose of this article is to give taxpayers an idea of the application process and the forms that must be submitted for the cancellation of the PPP loan that the company has received.
A business of any type (LLC, S-corp, sole proprietorship, etc.) that received funds through a PPP loan in 2020 can request the repayment of that loan. Taxpayers who have received a loan, kept proper records, followed the rules and guidelines of the Small Business Administration regarding how the loan proceeds were spent, and performed any necessary calculations should be entitled to a rebate on the repayment of the loan. loan or part of the loan that qualifies.
There are three different application forms that may need to be completed depending on your individual P3 loan program. You have 10 months from the end of your loan period to file one of these forgiveness requests. The three forms to use are Form 3508S, 3508EZ, and Form 3508, or equivalent forms offered by your bank.
The first is Form 3508S, which can only be used by those who have received $ 50,000 or less in P3 loan products. The request asks taxpayers to provide the requested rebate amount and to certify by signatures that all conditions have been met. No calculation is required on demand and no reduction in discounts due to reduced headcount or wages or salaries. This form is the simplest.
Form 3508EZ can be used by self-employed workers, independent contractors, or sole proprietors who do not have employees and / or wages at the time of the loan application process.
A business is also eligible to use this form if it has received more than $ 50,000 but less than $ 150,000 in P3 funds and has encountered one of two additional scenarios:
• Wages and salaries were not reduced by more than 25% during the loan period, and the number of employees was restored at the end of the chosen loan period – essentially, the number of employees net n ‘has not been affected; or
• Wages and salaries were not reduced by more than 25% during the loan period and you were not able to operate the same level of activity due to meeting any job requirements or the safety requirements of employees. customers related to COVID-19. As with the 3508S application, no calculation is required. Rather, taxpayers must confirm and justify that the loan proceeds were used for eligible costs.
The last form is the standard 3508 form. This application is for all taxpayers who do not meet the thresholds to file any of the previously mentioned forms. This standard request is much more detailed and complex, and may require additional time and supporting documentation. Taxpayers might want to seek help from their professional advisers.
“With all the uncertainty these days, the last thing taxpayers should worry about is how to complete the Paycheck Protection Program loan forgiveness application.”
Additionally, if your business has also obtained an EIDL advance, this amount should be subtracted from the amount of loan proceeds that would otherwise qualify for a rebate. This applies to all three loan forgiveness forms. Legislation has also been introduced (US Senate Bill 4321) that details the potential automatic remission for any PPP loan less than $ 150,000 if the debtor “signs and submits to the lender an attestation that the eligible recipient has made an effort to good faith to comply with the requirements of Section 7 (a) (36) of the Small Business Act. The status of the bill is uncertain at this time.
After you submit your application, the loan provider has 60 days from the date of receipt of the application to make a decision to the SBA. The SBA then has 90 days to review the claim and remit the rebate amount to the lender.
When it comes to PPP loan forgiveness requests, keep in mind the three different levels: less than $ 50,000, between $ 50,000 and $ 150,000, and above $ 150,000. Now, taxpayers must request a rebate within 10 months of the end of the loan period. Make sure you have complied with all rules and guidelines regarding eligible expenses and that you keep accurate and complete records. And don’t get overwhelmed by apps. If you need help, there are resources for you.
Jeff Laboe is a senior tax partner with MP CPAs; www.thempgroupcpa.com