PPP Forgiveness Rules
When it comes to succeeding in getting your Paycheck Protection Program (PPP) loan forgiven, the government has repeatedly moved the goalposts. Now they’ve moved the goalposts to an entirely different stadium, but the good news is it’s a stadium that gives the borrower a little bit of home-field advantage.
The Senate approved a House bill this week that revises PPP forgiveness rules, and it was signed by the President today.
The PP Flexibility Act
The highlighted changes:
- Under the original rules, you had to spend your loan proceeds within eight weeks after receiving them. Now you have 24 weeks, or until December 31, 2020, whichever date comes earlier.
- You can spend a bigger portion now on rent/mortgage interest and/or utilities. The limit increases from 25 percent to 40 percent (that’s the maximum; at least 60 percent of the loan must go to payroll).
- Before, you had to pay back the unforgiven portion of your PPP loan within two years. Now it’s five years.
- Previously, you had to make your first loan payment six months after the bank deposited the loan into your account. It’s now the date when the SBA gives the forgiveness amount to the lender – which should be a good bit later.
- For full forgiveness, you originally had until June 30 to restore the number of full-time equivalent employees (FTEs) to the levels that existed on February 15. The new bill pushes that deadline back to December 31, 2020.
- The bill relaxes the rules about restoring FTEs to previous levels somewhat. The following situations won’t now affect forgiveness:
- Not being able to rehire past employees despite a good-faith effort.
- Not being able to hire new employees to fill those FTEs.
- Most important: Forgiveness won’t be affected if the business is unable to return to the same level as before February 15 due to guidelines from the CDC, the Secretary of HHS, or OSHA regarding worker and customer safety (including sanitation and social distancing rules).
- PPP loan recipients can now defer the portion of Social Security the company pays is supposed to pay in 2020 (6.2 percent of wages) until 2021 (50 percent) and 2022 (50 percent).
There are still unanswered questions, such as whether a borrower can apply for forgiveness before the 24 weeks have passed. Don’t hold your breath waiting for the SBA to offer new guidelines that clear everything up; if you go on a hunger strike until we get answers, expect to lose a lot of weight. But for now, the latest news is positive.
The PPP Loan Forgiveness Form
Bellow is the PPP Loan Forgiveness form. You can download the form to your computer. This specific form is fillable on the computer. You also have the option to print it out to fill it out.
If you are having trouble filling out the form, our firm provides the service of doing it for you.
What Do You Need To Apply?
- The legal name of your business
- Business information
- Contact name
- Phone number
- Email address
- SBA PPP loan number
- Lender PPP loan number
- Number of employees on the date the loan application was made
- Number of employees on the date when the forgiveness application is made
- Date when you received the PPP loan
- Economic Injury Disaster loan amount (only applicable if you received this specific loan)
- Payroll schedule
- The period your PPP loan was used
- The PPP Flexibility Act will change this period to 24 weeks if passed by Congress
- Documentation that proves the loan was used for eligible business expenses
- A forgiveness amount calculation
- Eligible payroll costs
- Eligible business expenses
- Mortgage interest
Other PPP Facts
- Loan forgiveness could take up to 5 months to process
- Up to 60 days for your bank to process the request
- Up to 90 days for the SBA to accept or deny the request
- Business owners are expected to keep all records of their PPP loan for 6 years
- The SBA FAQ page
Learn more about applying for forgiveness from Rohit Arora.
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