The SBA’s Guide on PPP Loan Forgiveness
If you received Paycheck Protection Program (PPP) money, like 57 percent of Alignable members, you might have questions about forgiveness. Thankfully, the SBA came through with an application to kickstart the process and a helpful guide that contains everything you need to know about forgiveness.
It’s called the Loan Forgiveness Application, and it’ll help you determine what, if any, funding you have to repay.
What Is The Loan Forgiveness Application and How Can It Help?
The application, which they released on May 15, 2020, contains both a form to begin the forgiveness process and a worksheet with answers to top questions including:
- A way to determine whether your employees qualify as full-time or part-time employees
- An “Adjusted Covered Period,” so you can start the eight-week period at your first payroll after you received money, rather than on the date you received the loan
- Exceptions for employees who didn’t return to work despite your intention to rehire them, who were let go for valid reasons, or left voluntarily
- If incurred vs. actual payroll is eligible for forgiveness
- What salaries are too high for forgiveness
- Guidance on rent and debt payments coverage
- What forgiveness limits there are for you if you’re self-employed
- Full-time employee reductions and increases that still qualify for forgiveness (Safe Harbor)
However, the SBA didn’t make any changes to the 75-25 ratio of payroll to other costs.
Make sure to head over to the SBA, fill out the application, and read through the additional guidance so you can get as much of your loan forgiven as possible.
For more information on the Payroll Protection Program, take a look at the below articles or visit the SBA's Coronavirus (COVID-19): Small Business Guidance & Loan Resources.
Comments (1-10)
I am a small self employed business. Had to let my employee go until I can get some financial help with pay rent for salon suites, rent at home, my employee has a family that counted on her income. I have applied for help and has not received any help from any pay check protection etc. As a small business I think we should get our promises for help to come to us directly. Going through the process we were told to do and the large company were rewarded.😞
I received a PPP loan one week ago. I also went to the SBA website to see what I need for the forgiveness component. As I looked at the form, there was no category for a sole proprietor to factor in the amount of the PPP I received as a sole proprietor as part of the loan forgiveness. There was also a requirement for the loan agency to provide their PPP Loan Agency number. This was not provided in the DocUsign document I received from the loan agency. So, I called the loan agency. They still have not been assigned their PPP Loan Agency number. This will be issued within the next 2-3 weeks. I called my CPA and he indicated that I have until early October to apply for forgiveness. The SBA is "tweaking" the forgiveness form to deal with people like me that are sole proprietors. This is a work in progress. Hope this information helps all.
Update - The "forgiveness" component is being changed. The plan is to extend the time to use the money from 8 weeks to 24 weeks, reduce the loan amount that needs to be used for payroll from 75% to 60% and extend the repayment for balance repayment from 2 years to 5 years. This is from the House of Rep. The Senate will have it's own version.
Checked out the links to SBA and EIDL program is only for agricultural businesses right now. Thanks for the info on the CARES act. Much appreciated
The PPP and EIDL programs have been difficult to secure. The EIDL looks to be almost worthless and the PPP, despite large corporations getting more funds upfront has helped many small business owners. There are also tax credits to keeping employees. Also, most cities, counties and states have grant and loan funding opportunities, so don't forget to research for those funds. We are available at no charge to assist any small business with any questions on grant/loan programs other small business finance options.
What can we do, being a small business seems criminal where large businesses like google, target, big companies like that got all of the help, and what was interesting some big companies gave it back and ask the government to help small businesses that needed it, should have shamed whoever was in control.
Great info.
Thanks
Juan Estrada
I wood like to know more about the load for giveness.
I started working on this application last weekend and its worse than doing a long-form 1040 without a computer program or calculator.
We only have 1 employee but have 6 independent contractors. So we were not able to get a loan because we had to use 75 percent for payroll protection. We only received 1 unemployment check and have not been able to contact anyone about this because they say our pin # is incorrect. We were closed for 10 weeks and bills and utilities continued. We only last week received our stimulus check.