The funds used for eligible payroll costs, payments on business mortgage interest payments, rent, or utilities during either the 8 or 24 week covered period after disbursement.

What is happening now?

The PPP loan forgiveness process has been started by many companies having completed their covered period and applying for forgiveness for all or part of their PPP loans. Many banks are not ready to receive applications as yet. This is a good time to prepare if you haven’t already submitted.

How to prepare?

According to SBA;

Payroll information for all payroll periods that overlapped with the Covered Period or the Alternative Payroll Covered Period:

• Bank account statements or 3rd party payroll service provider reports documenting the amount of cash compensation paid to employees.
• Tax forms or 3rd party payroll service provider reports for the periods that overlap with the Covered Period or the Alternative Covered Period:
• Payroll tax filings reported, or to be reported, to the IRS (Form 941); and
• State quarterly business and individual employee wage reporting and unemployment insurance tax filings reported, or to be reported, to the relevant state.
• Payment receipts, cancelled checks, or account statements documenting any employer contributions to employee health insurance and retirement plans that were included by the borrower in the forgiveness amount.

Non-payroll (for expenses that were incurred or paid during the covered period and showing that obligations or services existed before February 15, 2020):

• Business mortgage interest payments: Lender amortization schedule and receipts verifying payments, or account statements.
• Business rent or lease payments: Current lease agreement and receipts or cancelled checks verifying eligible payments.
• Business utility payments: Invoices and receipts, cancelled checks or account statements.

What if you cannot get full forgiveness?

If you do not expect all of your loan to be forgiven – due to a large FTE reduction then it makes sense to wait until End of the year to see if you meet the FTE safe harbor. This safe harbor triggers if you have more FTEs when you file for forgiveness compared to the pay period inclusive of February 15, 2020.

The supports are very important and will make the forgiveness process easier. The bank has 60 days to review your application and determine how much of the loan is forgivable once you submit it to them. Once the bank submits it to the SBA, the SBA has 90 days to review the PPP loan forgiveness application and accept or reject the bank’s decision.

We can help you with PPP loan forgiveness applications and FTE calculations. Contact us if you need help.