Good news! Sounds like maybe the SBA is getting their shit together! They released a new form for us to fill out to get our PPP forgiven called the 3508EZ (there is also a form 3508 that is less EaZy.. get it?).
The SBA published a new PPP Loan Forgiveness Application Form (3508EZ) for borrowers that fit one of the following scenarios:
- Are self-employed and have no employees
- Did not reduce the salaries or wages of your employees by more than 25% and did not reduce the number or hours of your employees
- Experienced reductions in business activity as a result of health directives related to COVID-19 and did not reduce the salaries or wages of your employees by more than 25%
Borrowers that don’t meet the 3508EZ criteria can use the updated PPP Loan Forgiveness Application Form 3508. This is the original forgiveness application that has some more complicated steps for your FTE (full time staff) numbers, etc. if you did not bring back your full staff.
And just in case you missed it, the government passed a bill a few weeks back that was called the PPP Forgiveness Act and here are the highlights now towards your forgiveness:
- You now have a 24-week Covered Period (if you were funded prior to June 5, you can still use the 8-week period and Alternative Payroll Covered Period) to spend loan funds starting the date loan funds were deposited into your Chase business checking account.
- You must use at least 60% of funds for eligible payroll costs to qualify for full Loan Forgiveness, down from 75%.
- You can use up to 40% of funds for eligible non-payroll costs, up from 25%.
- If you request forgiveness, you won’t have to start making payments until the SBA makes a decision or remits the funds. You generally have to submit a Forgiveness request within 10 months after the Covered Period ends.
- If you don’t request Forgiveness, you won’t have to start making payments until 10 months after the Covered Period ends.
- If you don’t get the full amount or a portion forgiven you now have five years to repay the loan instead of two. Existing PPP loans can be extended up to 5 years if the lender and borrower agree. The interest rate remains at 1%. The bill allows businesses that took a PPP loan to also delay payment of their payroll taxes, which was prohibited under the CARES Act.
THINGS TO MAKE SURE YOU DO NOW!
- Know the forms and know which one you need to use
- Know how your bank wants you to submit!
- Many banks aren’t jumping at the bit to help you get your loans forgiven because it means more work for them and potentially less money so make sure you are in the know on how and when you can submit your loan forgiveness application.
- If you can’t find anything from them online or in your email, call them! It’s your responsibility to put the work in to ensure it’s forgiven.
- Get your records in order! You will need to have all sorts of fun documentation so get things organized now! A good breakout below:
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- Payroll documents:
Cash compensation and non-cash benefits
– Bank statements or third-party payroll provider reports noting cash compensation paid to employees
– Payroll tax forms (typically IRS Form 941) showing employee wages, tips, and other compensation
– State quarterly tax forms
– Cancelled checks or bank statements documenting employer contributions to health insurance and retirement plans - Business utility documents:
Include utility services prior to February 15, 2020
– Copies of invoices
– Cancelled checks or bank statements verifying utility payments - Business rent/lease documents:
Include rent lease obligations prior to February 15, 2020
– Bank statements listing the payee on the rent/lease agreement
– Rent/lease agreement identifying the payee - Business mortgage interest documents:
Include obligations/services prior to February 15, 2020
– Bank statements showing payments to the payee listed on the mortgage statement
– Mortgage statements identifying the payee - FTE documents:
Documents supporting the average number of FTE employees (not required if you don’t have employees)
-Payroll tax forms (typically IRS Form 941) showing employee wages, tips and other compensation
-State quarterly tax forms
- Payroll documents:
And remember, you aren’t in this alone so hit up your bankers, financial friends, us over here a MKBKllc and we will help you sort all this fun stuff out 🙂