Hoping to have your Paycheck Protection Program loan forgiven?
There’s now an application for that. The Small Business Administration and the U.S. Department of the Treasury have released the application and provided instructions to assist borrowers with that process.
The PPP Loan Forgiveness Application is available here.
Borrowers will need to provide information including their legal business name, contact information, PPP loan number, the date the loan was received, payroll schedule and the eight-week period that is covered. The forgiveness application, which has to be funneled through the lender, also details steps for providing payroll calculations and other accompanying documents that need to be submitted.
PPP loans are eligible to be forgiven if the borrower uses 75 percent of the total for payroll costs over eight weeks. The remaining 25 percent can be used for general business expenses. The lending program is a component of the more than $2 trillion Coronavirus Aid, Relief and Economic Security (CARES) Act, which was enacted on March 27.
The SBA says the Loan Forgiveness Application is intended to reduce compliance burdens and simplify the process by including:
- Options for borrowers to calculate payroll costs using an “alternative payroll covered period” that aligns with borrowers’ regular payroll cycles
- Flexibility to include eligible payroll and non-payroll expenses paid or incurred during the eight-week period after receiving their PPP loan
- Step-by-step instructions on how to perform the calculations required by the CARES Act to confirm eligibility for loan forgiveness
- Borrower-friendly implementation of statutory exemptions from loan forgiveness reduction based on rehiring by June 30
- Addition of a new exemption from the loan forgiveness reduction for borrowers who have made a good-faith, written offer to rehire workers that was declined
Borrowers and lenders should expect further guidance from the SBA in the coming days.
Furthermore, many borrowers no longer need to justify their PPP loan. However, all borrowers need to maintain full records for at least six years and be able to present them to an auditor upon request.
The U.S. Treasury Department recently eliminated the need for borrowers with loans of less than $2 million to prove they need PPP funding to offset economic uncertainty from the COVID-19 pandemic.
Instead, those borrowers are now afforded a safe harbor by being automatically deemed to have made the loan application in good faith.
While the safe harbor automatically justifies the need for the loan, it doesn’t preclude the SBA from later auditing the funding for accuracy, full-time equivalent calculations and reduction exceptions, and other assumptions used to calculate forgiveness.
Meanwhile, borrowers with a loan exceeding $2 million still need to prove they sought the funds due to adverse economic conditions during the pandemic.
The lending program is in its second iteration after the $349 billion initially allocated was exhausted in less than two weeks.
Nearly $195 billion in PPP loans have been issued to 2.75 million applicants since the funding was replenished in late April, according to SBA data.
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~Josh Heck, Marketing Manager, Syndeo