The Paycheck Protection Program (“PPP”) loan forgiveness application has finally been released. The application can be accessed here. The Small Business Administration (“SBA”) has promised that more guidance regarding PPP loan forgiveness will be available soon.
PPP loan forgiveness is not automatic: A PPP loan may only be forgiven if a borrower follows the forgiveness process. This process includes:
- Gathering the required documentation;
- Completing the loan forgiveness application; and
- Timely submitting the application and supporting documentation to your lender (or the lender servicing the loan) after your 8-week “covered period” has ended.
Loan Forgiveness Application Deadline: Many lenders are requiring that the loan forgiveness application be submitted within 90 days after the end of the 8-week “covered period.” Check with your lender to learn the deadline, and make sure you timely submit your loan forgiveness application. The lender is supposed to make a determination on loan forgiveness within 60 days after receiving the loan forgiveness application.
Required Documentation: In addition to the loan forgiveness application, PPP borrowers must submit documentation supporting their computation of the loan forgiveness amount. Required documentation varies by the borrower’s tax status (i.e., sole proprietor, partnership, S corp., C corp. or nonprofit), and generally includes:
- Bank account statements;
- Payroll reports that evidence payment of wages, payroll taxes and owner compensation for which forgiveness is sought;
- Federal employment tax reports;
- State unemployment insurance tax filings;
- Statements from group health care and retirement plan administrators documenting payment of benefits for which forgiveness is sought; and
- Copies of the underlying mortgage, rent and/or utility obligations that evidence that the obligations were in place on or prior to February 15, 2020, and documentation of payment of mortgage interest, rent and utilities for which forgiveness is sought.
Increasing Clarity and Available Assistance: The PPP loan forgiveness calculations are complex. It is helpful that we now have the application which clarifies the pathway to loan forgiveness. We also expect that the SBA will issue additional guidance soon. In the meantime, the attorney with whom you work at CLRM would be happy to help with questions and planning for submission of your business’ loan forgiveness application.