Navigating the Paycheck Protection Program Loan Forgiveness Application
The National Federation of Independent Businesses reports that about 70% of the small businesses in the U.S. applied for the Paycheck Protection Program (PPP), the small business loan program attached to the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
The PPP originally authorized up to $349 billion in forgivable loans to small businesses to pay their employees during the COVID-19 crisis. In the second round of funding, Congress provided an additional $320 billion for the PPP, enabling more small businesses to apply and get approved for forgivable loans.
If you represent one of the millions of small businesses that were approved for a PPP loan, it’s now time to fill out your PPP Loan Forgiveness Application.
This application can be complicated, and you may be concerned about the mixed information you’ve received from the Small Business Administration (SBA). That’s why the HR experts at MassPay did a deep analysis of the application to make it easy for small businesses like yours to apply for forgiveness.
Methods for Filling Out the Application
There are two methods for filling out the forgiveness application. The first method utilizes the “Covered Period” for purposes of calculating the figures you’ll need to input in the forms. This is the eight-week period after you received your loan funds.
The second method utilizes what’s known as the “Alternative Payroll Covered Period.” If you have a biweekly pay period or a more frequent payment schedule, you can use this method to ensure your payroll costs start being covered on the day of your first pay period after you receive funds.
PPP Forgiveness Safe Harbors
The SBA implemented a “Safe Harbor” policy which makes the loan forgiveness processes much easier if you received a loan of less than $2 million. If you’re in this category, you no longer need to prove that you applied for the loan out of necessity. The SBA assumes that you applied in good faith.
There is also a Safe Harbor policy in place that concerns the reduction of your FTE count. If you reduced FTE employee levels between February 15th and April 26th, then restored FTE levels by June 30th, your loan forgiveness won’t be impacted by FTE reduction.
Forgiveness for Non-Payroll Costs
Certain non-payroll costs, such as utility bills, interest paid on mortgages, rent payments, and other expenses may also be eligible for forgiveness. However, your non-payroll costs cannot exceed 25% of the total loan forgiveness amount on your application.
Completing the Form
MP’s HR experts also compiled a list of all the documentation you’ll need to submit to obtain forgiveness, as well as any documentation you’ll need to retain for six years after your loan is forgiven. More importantly, we completed the form, line-by-line, so you don’t have to.
If you missed our webinar on this topic, don’t worry. We created a post-webinar report that contains additional insights about key terms in the application, as well as detailed information about which method if filling out the form will provide you the most benefit.
It even includes a step-by-step guide for filling out the application, so you can skip all the complicated calculations and get straight to loan forgiveness.