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We have all been awaiting the final word on what we will need to provide, what will be allowed and what will be ACTUALLY forgiven and here it is!

We will give you the highlights but will also provide you the actual application HERE. Keep in mind this may be available eventually on your bank website so it can seamlessly be updated since you must submit the application to your lender (your bank, not SBA).

The application includes:

  1. PPP Loan Forgiveness Calculation Form
  2. PPP Schedule
  3. PPP Schedule A Worksheet
  4. PPP Borrower Demographic Information Form (Optional*)

ALL BORROWERS must submit 1 and 2 to your lender

If you applied and or received EIDL advance/loan, you will need your application number handy for this forgiveness application.

Eligible Payroll Costs:

  1. Borrowers are generally eligible for forgiveness for the payroll costs paid and payroll costs incurred during the eight-week (56-day) Covered Period (or Alternative Payroll Covered Period) (“payroll costs”).
  2. Payroll costs are considered paid on the day that paychecks are distributed or the Borrower originates an ACH credit transaction.
  3. Payroll costs are considered incurred on the day that the employee’s pay is earned. Payroll costs incurred but not paid during the Borrower’s last pay period of the Covered Period (or Alternative Payroll Covered Period) are eligible for forgiveness if paid on or before the next regular payroll date.
  4. For each individual employee, the total amount of cash compensation eligible for forgiveness may not exceed an annual salary of $100,000, as prorated for the covered period.
  5. Count payroll costs that were both paid and incurred only once.

If you’re interested in some light reading you can check the “Interim Final Rule on Paycheck Protection Program” posted April 2, 2020. Also VERY IMPORTANT to note C, we recommend you run a special payroll for any payroll period which overlaps the last day of the Covered Period.

Eligible Non-Payroll Costs:

  1. Covered mortgage obligations: payments of interest (not including any prepayment or payment of principal) on any business mortgage obligation on real or personal property incurred before February 15, 2020 (“business mortgage interest payments”)
  2. Covered rent obligations: business rent or lease payments pursuant to lease agreements for real or personal property in force before February 15, 2020 (“business rent or lease payments”); and
  3. Covered utility payments: business payments for a service for the distribution of electricity, gas, water, transportation, telephone, or internet access for which service began before February 15, 2020 (“business utility payments”).
  4. An eligible non-payroll cost must be paid during the Covered Period or incurred during the Covered Period and paid on or before the next regular billing date, even if the billing date is after the Covered Period.
  5. Eligible non-payroll costs cannot exceed 25% of the total forgiveness amount.
  6. Count non-payroll costs that were both paid and incurred only once.

Keep in mind the amount of loan forgiveness you apply for may be subject to reductions as explained in PPP Schedule A which include; amounts paid to owner-employees, a self-employed individual, or general partners.

The application also delineates what documentation will be needed for proving Payroll Costs, Non-Payroll Costs, and Full-Time Employee (FTE) levels.

Payroll per the SBA: “Documentation verifying the eligible cash compensation and non-cash benefit payments from the Covered Period or the Alternative Payroll Covered Period consisting of each of the following:”

  1. Bank account statements or third-party payroll service provider reports documenting the amount of cash compensation paid to employees.
  2. Tax forms (or equivalent third-party payroll service provider reports) for the periods that overlap with the Covered Period or the Alternative Payroll Covered Period: i. Payroll tax filings reported, or that will be reported, to the IRS (typically, Form 941); and ii. State quarterly business and individual employee wage reporting and unemployment insurance tax filings reported, or that will be reported, to the relevant state.
  3. Payment receipts cancelled checks, or account statements documenting the amount of any employer contributions to employee health insurance and retirement plans that the Borrower included in the forgiveness amount (PPP Schedule A, lines (6) and (7)).

FTE per the SBA: Documentation showing (at the election of the Borrower):

  1. The average number of FTE employees on payroll per month employed by the Borrower between February 15, 2019, and June 30, 2019;
  2. The average number of FTE employees on payroll per month employed by the Borrower between January 1, 2020, and February 29, 2020; or
  3. In the case of a seasonal employer, the average number of FTE employees on payroll per month employed by the Borrower between February 15, 2019, and June 30, 2019; between January 1, 2020, and February 29, 2020; or any consecutive twelve-week period between May 1, 2019, and September 15, 2019.
  4. The selected time period must be the same time period selected for purposes of completing PPP Schedule A, line 11.
  5. Documents may include payroll tax filings reported, or that will be reported, to the IRS (typically, form 941) and state quarterly business and individual employee wage reporting and unemployment insurance tax filings reported, or that will be reported, to the relevant state.
  6. Documents submitted may cover periods longer than the specified time period.

Non-Payroll per SBA: Documentation verifying the existence of the obligations/services prior to February 15, 2020, and eligible payments from the Covered Period.

  1. Business mortgage interest payments: Copy of lender amortization schedule and receipts or cancelled checks verifying eligible payments from the Covered Period; or lender account statements from February 2020 and the months of the Covered Period through one month after the end of the Covered Period verifying interest amounts and eligible payments.
  2. Business rent or lease payments: Copy of current lease agreement and receipts or cancelled checks verifying eligible payments from the Covered Period; or lessor account statements from February 2020 and from the Covered Period through one month after the end of the Covered Period verifying eligible payments.
  3. Business utility payments: Copy of invoices from February 2020 and those paid during the Covered Period and receipts, cancelled checks, or account statements verifying those eligible payments.

There will also be documents you will not have to submit but will HAVE to maintain for SIX YEARS after the date the loan is forgive or repaid in full. The SBA will have the right to request these documents for auditing purposes.

PPP Schedule A Worksheet or its equivalent and the following:

  1. Documentation supporting the listing of each individual employee in PPP Schedule A Worksheet Table 1, including the “Salary/Hourly Wage Reduction” calculation, if necessary.
  2. Documentation supporting the listing of each individual employee in PPP Schedule A Worksheet Table 2; specifically, that each listed employee received during any single pay period in 2019 compensation at an annualized rate of more than $100,000.
  3. Documentation regarding any employee job offers and refusals, firings for cause, voluntary resignations, and written requests by any employee for reductions in work schedule.
  4. Documentation supporting the PPP Schedule A Worksheet “FTE Reduction Safe Harbor.”

Remember, all records relating to your PPP loan, including; documentation submitted with the PPP loan application, documentation supporting your certifications as to the necessity of the loan request, documentation necessary to support the Borrower’s loan forgiveness application, and documentation demonstrating the Borrower’s material compliance with PPP requirements.

The great thing is they have published this as early as they have so we can all begin keeping records of the necessary documents and no longer playing the guessing game!!

SBA PPP Loan Forgiveness Application PDF

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