By now, many of you have already received an email or other notifications from your lender about the loan forgiveness process for your Small Business Administration (SBA) Paycheck Protection Program (PPP) loan. The SBA has updated the PPP rules to provide additional time and options when applying for loan forgiveness. And under the new rules, as previously reported in this email/News Blog, forgiveness is very easy to achieve. I have purposely delayed an email/News Blog about PPP forgiveness due to Congress wrangling over additional stimulus, which causes this matter to also be delayed. Possibly you’ve seen press reports and other references to proposals in the U.S. government to simplify the forgiveness application process; for instance, for borrowers who received PPP loans of $150,000 or less. What we expected and hoped for was that for loans under $150K you could simply sign off without submitting any documents or back-up. While it is not known if or how those proposals or potential changes might proceed, these reports may influence your decision to apply now or wait for further clarity. You may visit the SBA website or the U.S. Treasury Assistance for Small Businesses website for the most accurate updates on U.S. government policies about the PPP. I can tell you that based on the latest updates from the SBA, you now have more time to gather your documents and prepare your application than when you took out the loan, if you did so prior to June 5. If so, the timeframe for applying for loan forgiveness in the promissory note no longer applies. Those businesses with loans after June 5 already have the extension built in. However, some of you have the first loan payment coming due in October or November, so you may want to proceed now with the Forgiveness Application. Another suggestion is to contact the lender and ask if they will delay the 2020 payments while we all wait for our federal Congress to act. If you choose to start the application now, here are the next steps you should take: Almost everyone can use the Form 3508EZ. It is fairly straightforward and most requires you to check several boxes, enter your loan number, and company data. There is a calculation for which you will need accounting data of the amount of rent or mortgage paid, utilities, and payroll itself. Because you only have to use 60% of the proceeds on payroll, it should be easy to achieve complete loan forgiveness. Payroll includes most benefits like company paid health insurance and retirement plan contributions. If you recall, we reported earlier that the balance can be spent on rent (or mortgage interest) and utilities. For documentation, for most, it isn’t a great deal of paperwork. You’ll need your federal Form 941 payroll reports, and a payroll detail report from your payroll processor. If you include payments for any employer contributions to employee health insurance and retirement plans you’ll need payment receipts, cancelled checks (both sides), or account statements documenting the amount. For utilities and rents, you may use cancelled checks or a another method for proof of payment, such as the bank statements with receipts. Your lender probably has a portal or other electronic method to submit your forgiveness application, so check for emails from them about this topic, or contact the lender before you begin. FYI – here are the PDFs of the Form and the Instructions provided by the SBA. Again, your lender will likely have created their own process, which would include the form – digitally or otherwise.
· PPP EZ Loan Forgiveness Application Form 3508EZ · SBA PPP EZ Loan Forgiveness Application Instructions My thinking is that it is likely the Congress will act to change loan forgiveness for amounts under $150,000 to a mere signature -- but, of course, that is not guaranteed. Congress will do something, but the bigger question is when will they act. So, to conclude, you have 2 choices right now:
1) wait to see if Congress acts – which may not be until after the lame duck session is over in late January. Meanwhile, you might have to make a loan payment or two. 2) or to avoid making a loan payment that will be reimbursed later, start the application for loan forgiveness within the next week or so to avoid having to make a payment at all If we keep your accounting or bill-pay records, or if we process your payroll, email us with your request for specific documents and reports you need from us, including copies of cancelled checks, Forms 941 payroll reports, and the like. If you’d like assistance in applying for PPP forgiveness with your lender, forward the lender’s email to us about applying for forgiveness, and contact us.