If you received a Payroll Protection Program (PPP) loan, now is the time to start the forgiveness process. Until the program closed on August 8, the SBA issued 5.1 million loans that totaled over $523 billion. There are currently two loan forgiveness applications, an EZ short form and a longer form. Here is what your business needs to know to apply for forgiveness.
What Do You Need to Consider Before Applying?
If you received a loan, you must be able to demonstrate that you spent 60% or more of the amount on payroll costs to receive full forgiveness. The rest of the Payroll Protection Program loan funds should have been used on a specific set of non-payroll costs like mortgage payments, utility payments and rent. The funds need to be used within 24 weeks, and the SBA will forgive eligible expenses that were either paid during the covered period or incurred during it.
When Do You Need to Apply?
Businesses can apply for Payroll Protection Program loan forgiveness before or on the maturity date of the loan that was received providing that the borrower used all of the money that they are requesting forgiveness for. If you have spent your PPP loan and are not going to be subject to limited forgiveness due to eliminating full-time equivalent employees or salary cuts, you can apply for forgiveness now. If you are still waiting to spend the funds or need to remedy any reductions in your number of staff, it is better to wait until you have done so. If you do not seek forgiveness within 10 months after the last day of the covered period, you must start paying principal and 1% interest.
What Documentation Do You Need?
Every business applying for Payroll Protection Program forgiveness needs to submit documents (detailed in the application instructions) that show the usage of PPP funds. You can take a look at the application here, but some of the documents include:
- Documents verifying the number of full-time equivalent employees on the payroll and their salaries
- Form 941
- Payroll, unemployment and income filings from the state
- Documents demonstrating that all of your rent and utility payments eligible for forgiveness were already active in February 2020
How to Apply for Payroll Protection Program Loan Forgiveness
Every business must complete the appropriate paperwork through the SBA here. While the portal to apply has been opened, many experts are suggesting waiting for additional loan forgiveness propositions in upcoming legislation that might change the process.
Rely on Rubino & Company for Help Filing Your PPP Loan Forgiveness
Since 1980, Rubino & Company has provided expert outsourced accounting services and consulting services to healthcare organizations, non-profits, commercial organizations and individuals. Whether you need assistance with attestation or tax consulting, we strive to be your resource for consulting and accounting services. To learn more about our outsourced accounting services, please call us today at (301) 564-3636.