From the U.S. Chamber of Commerce
Applying for forgiveness for a Paycheck Protection Loan can be a challenging task. These resources can help you navigate how to get full forgiveness.
The federal government created the Paycheck Protection Program (PPP), part of the CARES Act, in March 2020 to provide businesses affected by COVID-19 with a lifeline. The PPP offered loans to companies that could be forgiven later if the right circumstances were met, including using the funds to maintain employee salaries and hire back workers.
While forgiveness was an attractive attribute for PPP loans, the actual process of obtaining forgiveness can be challenging for business owners. Forgiveness requires that businesses do many calculations, provide documentation, fill out forms and other time-consuming tasks.
Here are seven resources, including guides and videos that can help businesses obtain and understand PPP loan forgiveness.
If you’re trying to get your head around the general requirements for PPP loan forgiveness or the basics of the program, we’ve published an explainer about PPP loan forgiveness. This article outlines how PPP works, links to the applications businesses need to fill out and much more.
The Small Business Administration (SBA), which manages the PPP program, offers a substantial document of questions and answers regarding forgiveness. This page, which has been updated several times, can be helpful and addresses precise questions. Many of the answers also include useful examples that illustrate how the answer is implemented in practice. For example, for the question, “How do borrowers calculate the reduction in their loan forgiveness amount arising from reductions in employee salary or hourly wage?” the document dives into the answer. It then provides three different examples of how that can be calculated depending on the circumstance.
Hector Garcia, a CPA with more than 100,000 subscribers on YouTube, has been sharing accounting videos online for more than 10 years. In this helpful video, Garcia outlines forgivable and non-forgivable expenses, explains the latest rules that were established in June 2020, discusses how to fill out forgiveness application forms and talks about forgiveness calculation examples. This lengthy video also includes handy timestamps in the description so you can click on which part of the presentation is most relevant to your business.
One of the most common questions businesses have about PPP loan forgiveness is when to file the paperwork for it.
In October 2020, the Small Business Administration and Treasury Department released a simpler application for forgiveness for any business whose loan totaled less than $50,000. Companies that fall into this category need to fill out the Form 3508S. Financial planner Travis Sickle walks through everything you need to know about this path to forgiveness in this YouTube video. He notes that while the Form 3508S is more manageable than other forgiveness applications, there is still work to be done when it comes to calculations and documentation.
Many self-employed people applied and received PPP loans, and if they took out less than $50,000, they could use the Form 3508S as noted above. However, in some cases, self-employed people may need to fill out and submit Form 3508EZ, which was created specifically for self-employed workers. Bookkeeping company Bench made a walkthrough article and video that explains Form 3508EZ and how self-employed people should approach loan forgiveness. This walkthrough includes explainers on what information you need to fill out the application, including how to fill it out with or without payroll.
One of the most common questions businesses have about PPP loan forgiveness is when to file the paperwork for it. It’s complicated because a business may see more benefits by filing for forgiveness in 2021, depending on its circumstances. A lengthy explainer video by Certified Public Accountant Joshua Jenson explains the timing concerns in detail through the lens of how he is helping his own clients. Additionally, Fundera CEO Jared Hecht writes in Forbes that he would advise waiting on forgiveness as well. Hecht notes that most “loan recipients can put off applying for forgiveness until Q1 of 2021 at the earliest.” If a business holds off, Congress could potentially offer blanket forgiveness for loans up to a certain amount.
Another complicated aspect of PPP loan forgiveness is how it affects a business’s taxes. We’ve created a guide that explains the tax implications of PPP loans, including if a forgiven PPP loan becomes taxable income, if you can write-off expenses that were paid for with PPP loan funds and more.
CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.
Follow us on Instagram for more expert tips & business owners stories.