If you read our April 29 post, “How to Determine Loan Forgiveness Under the Paycheck Protection Program,” or if you’re an owner or manager of one of the nearly 4 million U.S. businesses that received a loan under the Paycheck Protection Program (PPP) — you’re probably starting to wonder how to go about having that loan converted to a grant and forgiven.
For the uninitiated, the PPP is a $659-billion economic relief program established as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act to help small businesses, self-employed workers, sole proprietors, certain nonprofit organizations, and tribal businesses remain solvent and continue paying their workers during the COVID-19 shutdown. Under the PPP, a qualifying small business (generally with fewer than 500 employees) could obtain a loan of up to $10 million at a very low interest rate (1%) and have the loan forgiven after proving that the money was used for qualified payroll and other expenses.
Earlier this month, the Small Business Administration (SBA)released its PPP Loan Forgiveness Application along with detailed instructions for completing and submitting the application.
The form’s instructions help you understand how to apply for forgiveness of your PPP loan, consistent with the CARES Act. and to simplify the process, the instructions and form include several measures to reduce compliance burdens, including:
- Options for you to calculate payroll costs using an “alternative payroll covered period” that aligns with your normal payroll cycles
- Flexibility to include eligible non-payroll and payroll expenses incurred or paid during the eight-week period after receiving your PPP loan
- Step-by-step instructions on how to perform the calculations required by the CARES Act to confirm eligibility for loan forgiveness
- For borrowers who have made a good-faith, written offer to rehire workers that was declined, the addition of a new exemption from the loan forgiveness reduction
- Borrower-friendly implementation of statutory exemptions from loan forgiveness reduction based on rehiring by June 30
SBA will also soon issue regulations and guidance to further assist as you complete your PPP Loan Forgiveness Application.
For more information, we recommend visiting SBA.gov to download the Paycheck Protection Program Loan Forgiveness Application and Instructions for Borrowers (note: link is for a PDF file). If English is not your first language, SBA provides Coronavirus Recovery Information in other languages, including 17 languages other than English.
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About the Author: Laura Stees, CPA is a partner and business strategist with Stees, Walker & Company, LLP — a San Diego, Calif.-based boutique tax consulting firm focused on personalized tax and financial guidance to individuals and businesses.
Disclaimer: The information in this blog post about loan forgiveness for a Paycheck Protection Program loan is provided for general informational purposes only and may not reflect current financial thinking or practices. No information contained in this post should be construed as financial advice from the staff at Stees, Walker & Company, LLP, nor is this the information contained in this post intended to be a substitute for financial counsel on any subject matter or intended to take the place of hiring a Certified Public Accountant in your jurisdiction. No reader of this post should act or refrain from acting on the basis of any information included in, or accessible through, this post without seeking the appropriate financial planning advice on the particular facts and circumstances at issue from a licensed financial professional in the recipient’s state, country or other appropriate licensing jurisdiction.
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