Everything You Need to Know About PPP Loan Forgiveness

After closing the application to receive Paycheck Protection Program (PPP) loans on August 8th, 2020, SBA began offering a forgiveness program to those loans which meet the employee retention criteria. Most recently, SBA has released a much simpler way to get your PPP loans forgiven if these loans are for $50,000 or less. This form is called the 3508S, the most recent SBA loan forgiveness application.

“The PPP has provided 5.2 million loans worth $525 billion to American small businesses, providing critical economic relief and supporting more than 51 million jobs … today’s action streamlines the forgiveness process for PPP borrowers with loans of $50,000 or less and thousands of PPP lenders who worked around the clock to process loans quickly … we are committed to making the PPP forgiveness process as simple as possible while also protecting against fraud and misuse of funds.  We continue to favor additional legislation to further simplify the forgiveness process.”

            - Secretary Steven T. Mnuchin

Here’s Your Checklist:
To receive forgiveness for this PPP loan, you simply have to certify 7 items:

1)    The dollar amount requested for forgiveness does not exceed the principle PPP loan amount and: A) used for a qualified transaction, such as payroll, mortgage interest payments, rent, utilities, or another qualified transaction. B) Payroll costs must make up at least 60% of the requested forgiveness amount C) for 24 week Covered Period, does not exceed 2.5 months’ worth of the owner-employee or self-employed person’s 2019 compensation, capped at $20,833 per person. D) for 8 week Covered Period, does not exceed 8 weeks of the owner or self-employed person’s 2019 compensation, capped at $15,385 per person.

2)    Understanding that the funds were used for an authorized purpose within the business.

3)    Accurately verify the payments for the authorized payroll and non-payroll expenses for which the borrower seeks forgiveness.

4)    The borrower must submit to the lender documentation of payroll expenses, obligations prior to February 15, 2020, and business mortgage interest payments, rent/lease payments, and utility expenses.

5)    All information in the documentation provided is truthful.

6)    The tax documentation submitted to the lender are consistent with those reported to the IRS, or those that the borrower will submit in the future.

7)    Acknowledgement of the fact that SBA may ask for additional information as necessary.

The Up Side:
All of these 7 items appear on the 3508EZ, but the 3508S removes the following 3 items:

1)    The borrower did not reduce hourly wages or salaries during the Covered Period.

2)    The borrower did not reduce the number of employees or the average hours employees work between January 1, 2020 and the end of the Covered Period.

3)    The borrower was unable to operate between February 15, 2020 and the end of the Covered Period at the same level of business activity as before February 15, 2020 due to compliance with requirements or established guidance.

If your small business adheres to all of these requirements and guidelines, your business will most probably qualify for PPP loan forgiveness by SBA.

If you did not take advantage of the SBA PPP loan before the cutoff of August 8th, you’re still in luck! US Capital Solutions is able to offer you loans with the same terms, with rates as low as 4.5%! Whether you need funding to pay for software to help transition your business online, or if you need a new piece of equipment that you otherwise would not have been able to afford, given your payroll expenses, US Capital Solutions is here to help!

Talk to one of our Account Executives today or fill out a simple, FREE application!