PPP & Loan Forgiveness

On May 15, 2020 the Small Business Administration (SBA) published the Paycheck Protection Program (PPP) Loan forgiveness Application Form 3508.  This eleven-page document contains the instructions and forms for requesting PPP Loan Forgiveness.

Here is an overview of my takeaway for what you will need to do to have your PPP Loan Forgiven.  This information is being provided as of 5/30.  There are frequent clarifications provided by both the SBA and the Department of Treasury which may change our interpretation of the loan forgiveness rules.  Also as of the writing of this letter a bill has passed the house and will be reviewed and voted upon by the Senate.  If it passes, and becomes law, there can be changes to the information presented in this article.

When can I apply for loan forgiveness?

You will need to wait at least 7 weeks, and it is recommended that you wait at least 8 weeks, from when you receive the funds, to request forgiveness.

How do I request forgiveness?

To apply for forgiveness, you will need to complete SBA form 3508 and submit it to the bank that you received the PPP loan funds from.  The bank will review the application, and disclosure documents, and forward it to the SBA.  Your bank will let you know how much of the loan was forgiven within 60 days of receipt of your application. Download SBA Form 3508 here

How do I complete the SBA form 3508?

SBA form 3508, is attached for your reference.  It is a fairly complicated from to complete.  You should gather payroll reports from 1/1/2019 – present.  There are also additional Non-Cash compensation payroll costs which include employee health insurance, employee retirement plans, and employer state and local taxes assessed on employee compensation.  Payroll costs need to constitute at least 75% of your loan forgiveness.  Up to 25% of the loan forgiveness can be for nonpayroll costs which include Mortgage Interest, Lease Payments and Utility Payments.  Most of these nonpayroll costs had to have existed prior to 2/15/20 to be eligible for the forgiveness.

For the payroll forgiveness not to be reduced, you need to have employed the same number of employees (known as Full Time Employees (FTE)) after the coronavirus as you did before the coronavirus, and pay them at least 75% of what they were making before the coronavirus, after the coronavirus.

There are many dates that can be chosen to compare full time employees (FTE). A safe harbor is that the SBA wants you to have employed the same number of FTE’s on 6/30/20 as you did before the coronavirus began.  Doing so will help maximize your loan forgiveness, even if you let people go, so long as you can hire them back by 6/30/20.

What if I need help?

The SBA requires that you correctly fill out and submit the loan forgiveness application, along with necessary backup documents, to obtain forgiveness.  We realize that this can be a daunting task for many business owners.  The Team at Jason S. Osser CPA and Associates has taken extensive training and is monitoring this ever changing PPP Loan Forgiveness Process.  We would be happy to assist you in this journey.  If you would like our assistance, send me an email at Jason@ossercpa.com which contains PPP Loan Forgiveness Application in the subject area.  We will send you a short questioner and from there will let you know what our cost is to prepare your loan application.   When finished, we will present you with the completed SBA form 3508 and necessary supporting documentation for you to submit to your bank for loan forgiveness.