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PPP loan forgiveness U S. Small Business Administration

ppp loan forgiveness rules

With the recently passed Paycheck Protection Program Flexibility Act of 2020, borrowers have 24-weeks to use the funds from the PPP loan before having to apply for loan forgiveness. If you received the PPP loan before the flexibility act, you can choose the original eight-week period to use the funds and then begin applying for the PPP Forgiveness. Eligible clients can apply now for PPP loan forgiveness Our PPP loan forgiveness portal is now open and includes a simplified forgiveness application for PPP loans of $150,000 or less. We will email clients with a link to access our loan forgiveness application over the coming weeks, when the application becomes available to them.

If the Forgiveness Application is not submitted within 10 months following the last day of the maximum Covered Period (24 weeks), the Borrower will need to begin paying principal and interest in accordance with the loan documents. Borrowers eager to get PPP loans forgiven may want to know the deadline for forgiveness applications and whether they can submit applications early. If they are a co-owner in the company where they work, they may also want to know if they are subject to the stricter PPP compensation replacement calculations for owner-employees.

You kept employees on the payroll

If you plan to request a SBA Loan Review, you must do so within 30 calendar days of receiving the email or you will not be eligible. Gross receipts of an affiliate (unless a waiver of affiliation applies) are calculated by adding the gross receipts of the business concern with the gross receipts of each affiliate. For more details on the salary reduction calculations, please refer to the directions on page 4 of Form 3508 Loan Forgiveness Application Instructions.

  • This is calculated by comparing the average weekly FTE employees during the covered period with the FTE reduction reference period selected.
  • Some payroll providers have all the information you need in an easy to use document.
  • PPP2 loans are limited to $2 million, and some businesses qualify for an additional forgivable loan, called a second draw.
  • Step 3Determine whether a full-time equivalent (FTE) reduction occurred.
  • Employees who were employed as of February 15, 2020, and were laid off or put on furlough may not wish to be rehired onto payroll.
  • In order for your loan to be fully forgiven, at least 60% must be spent on payroll costs.

Determine whether a full-time equivalent (FTE) reduction occurred. Consider whether any FTE reduction exceptions apply and/or if FTE reduction safe harbor 1 or 2 applies. https://adprun.net/bookkeeping-for-truck-drivers/ Loans issued through the SBA’s COVID-19 Economic Injury Disaster Loan (EIDL) program need to be repaid in full, though payments are deferred for the first two years.

Paycheck Protection Program Second Draw: what to know

If you receive a PPP loan, you are limited in how you can use your funds. For now, just understand that this loan is primarily meant to help you pay and retain your employees if your business has been affected by the coronavirus pandemic. The Small Business Administration’s Paycheck Protection Program (PPP) brought much-needed relief to small business owners affected by the COVID-19 pandemic.

The latest guidance from the SBA states for first draw PPP loan forgiveness applications using the S form, documentation does not need to be uploaded, however, you are required to retain all records relating to your PPP loan and may be required to submit such documentation to the SBA, upon request. Whether it’s eight weeks or 24 weeks, borrowers may apply for forgiveness before the end of the covered period. Payroll costs are considered paid on the day that paychecks are distributed or the borrower originates an ACH credit transaction.

Requirements for PPP loan forgiveness

Remember, in order to be eligible for 100% loan forgiveness, at least 60% of the PPP loan must be used for eligible payroll costs. For other limitations, please see what types of payroll costs are eligible for loan forgiveness. If you are considering a change of ownership for your business, which could include a merger, asset sale, stock sale or transfer due to the death of a business owner, please notify Wells Fargo as far Law Firm Bookkeeping 101 in advance of the change of ownership transaction as possible. You will need to request prior approval from Wells Fargo before you initiate the change of ownership and provide a copy of the proposed change of ownership agreement and other relevant documents. If you do not obtain prior approval of any change of ownership, it will be considered a default event and may affect your ability to apply for PPP loan forgiveness.

ppp loan forgiveness rules

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