FAQs on New PPP Forgiveness Rules

To start your documentation for the purpose of PPP loan forgiveness, record the amount, date, and lender information in your books as soon as your PPP funds are deposited into your account. You’ll want to make it easy on yourself when it comes time to show how you spent your PPP loan. One way to streamline the process of documenting your expenses is to separate your business and personal finances. If your application for PPP loan forgiveness is only partially approved, an email will be sent to you with instructions on how to request a SBA Loan Review of your Partial Forgiveness decision. It is at your discretion if you want to request a SBA Loan Review of your Partial Forgiveness decision. The SBA reserves the right to review the partial approval decision in its sole discretion.

Now, the covered period has been extended to between 8 and 24 weeks. The PPP loan forgiveness rule states that borrowers are required to either incur or pay the loan within a 24-week period (which begins on the first day of loan disbursement). The first step to applying for PPP loan forgiveness is to download the application.

Qualifying Expenses For PPP Loan Forgiveness

“Fully forgiving Arizona small businesses’ PPP loans provides needed economic certainty to local employers—which have suffered losses through no fault of their own—while protecting Arizonans’ jobs Retail vs Cost Method of Accounting and paychecks.” If there’s a balance left, PPP loan repayment starts 10 months after the loan period. You were done in the last step if your lender and the SBA decided to forgive the entire loan.

It’s best to check this calculation throughout your covered period to make sure you’re meeting the requirement. To help, we’ve answered the most common questions around PPP rules on rehiring employees. Expenses eligible for forgiveness are those that are incurred over the 8 to 24 week period, starting from the day you receive your PPP loan from your lender.

Rule

However, all PPP borrowers must retain their PPP loan documentation for up to four years following the loan. SBA Form 3508S was amended to conform to section 307 of the Economic Aid Act, which requires a simplified forgiveness application for loans of not more than $150,000. SBA Form 3508D will be used by borrowers where a covered individual, as defined in section 322 of the Economic Aid Act, holds a controlling interest in the borrower. If the borrower submitted a loan forgiveness application to its PPP lender before December 27, 2020, then the principal executive officer, or individual performing a similar function, of the borrower shall submit to its PPP lender an SBA Form 3508D disclosing the controlling interest(s) not later than January 26, 2021.

Do not count the salary reduction for employees who were already counted in the FTE reduction. Loan forgiveness may be reduced if the number of average weekly FTE employees during the covered period was less than during the FTE reduction reference period selected. To be eligible, nonpayroll costs must be paid during the covered period, or incurred during the covered period and paid on or before the next regular billing date, even if the billing date is after the covered period.

Begin repaying your loan

PPP forgiveness rules have changed a few times in the past nine months, so my best advice is to wait for lenders and the SBA to catch up with the newest legislation before applying for forgiveness. Your forgiveness https://adprun.net/how-much-should-i-charge-for-bookkeeping-services/ amount is reduced by $250 multiplied by your PPP loan period. If your PPP period is 24 weeks, the forgiveness amount is reduced by $1,500 ($250 additional monthly reduction ✕ 6-month PPP period).

As of now, any rehiring must be done before the end of your covered period. After receiving a Paycheck Protection Program (PPP) loan, it’s time to start thinking about how to use the loan to receive full PPP loan forgiveness. You’ll have 2 or 5 years to repay the loan (2 years if you received your PPP loan before June 5, 2020—5 years if you received your loan after).