Paycheck Protection Program loan forgiveness deadlines are on the horizon. Borrowers must submit forgiveness applications to lenders 10 months from the end of their covered periods, so borrowers receiving PPP loans in early- to mid-April 2020 have due dates starting in July 2021. If a loan forgiveness application is received by the due date, payments are deferred until a decision on the forgiveness application is made by the lender and the Small Business Administration.
In July, the SBA officially eliminated the loan necessity forms and review for PPP loans of $2 million or greater, and said it would no longer request either version of the loan necessity questionnaire for for-profit borrowers or not-for-profit borrowers. Most recently, the SBA also announced that it will launch a new application portal August 4th, allowing borrowers with PPP loans of $150,000 or less to apply for forgiveness directly with the agency instead of having to go through their lender. More than 600 banks have agreed to allow access to the portal for more than 2.17 million borrowers!
As most clients already know, to apply for loan forgiveness, the SBA Form 3508, SBA Form 3508EZ, or SBA Form 3508S must be completed and submitted to the lender, together with supporting documentation. The SBA did not eliminate the need for borrowers requesting PPP loan forgiveness to document the use of loan proceeds.
Documentation should be provided for payroll periods that overlapped with the covered period. Be sure to include bank statements or third party payroll service provider reports documenting the amount of cash compensation paid to employees. Also include payroll tax reported to the IRS on Form 941. Don’t forget state quarterly employee wage reporting and unemployment insurance tax filings reported to the relevant states where you operate.
Check with us when calculating eligible payroll costs for loan forgiveness that are taken into account for purposes of claiming the Employee Retention Tax Credit under Section 2301 of the CARES Act. See prior article HERE: https://www.fuoco.cpa/maximizing-both-the-employee-retention-credit-and-ppp-loan-forgiveness/
Documentation of forgivable non-payroll costs should also be included, like lender amortization schedules and receipts verifying payments, or lender account statements, which will document business mortgage interest payments. Copies of leases and receipts or cancelled checks can verify rent expenses. Similar documentation can confirm utility payments, eligible operations expenditures, eligible supplier costs, and eligible worker protection measures.
The SBA still has the right to undertake a review of the PPP loan and the forgiveness decision by the lender. If it does so, the lender will provide the borrower notification of the SBA review, and any subsequent SBA review decision. Borrowers have the right to appeal certain SBA review decisions. You must have all your “ducks in a row.” The loan deferment period has been extended for PPP loans in cases when the borrower files a timely appeal of a final SBA loan review decision.
Contact Us: Avoid making unnecessary PPP loan payments. We have a PPP loan forgiveness task force ready to help you, as well as tools and resources to make it as easy as possible for you and your business. After the loan forgiveness application and supporting documentation are submitted, it is critical for borrowers to follow up with their lender promptly regarding requests for additional documentation. If you have questions or need help contact us at CPA@fuoco.com or call toll free: 855-542-7537.
