We have a few more details for you regarding Paycheck Protection Program (PPP) loan forgiveness:
The Form
The PPP Loan Forgiveness Application will be submitted to the owner of the loan. This may be different than the Bank that transferred the loan funds. Banks are allowed to sell the PPP Loans on the secondary market. The form should be submitted to the entity that holds the loan. And of course, the form is likely to change as the process continues.
The Amount Forgiven
All or part of the loan may be forgiven.
Suggestions for 100% forgiveness:
Document all “Forgivable Costs”
Payroll (gross wages, group healthcare, retirement)
Interest (on collateralized business loans)
Rent/Lease (on real and personal property)
Utilities (gas, electricity, water, phone, cell phone, internet)
Use all the funds
Within the 8 weeks after receipt of the cash
Prepay a month’s rent, prepay a month’s healthcare, pay outstanding charges from prior periods
Do not prorate payroll. The full payrolls of both the first and the last payrolls during the 8 week period are considered regardless of being earned outside of the 8 week period.
75% Payroll – 25% Other
Most forgiveness reductions will be from payroll matters
Wages or FTE’s were reduced
Still have time to rehire
Still have time to increase wages
Less than 75% payroll costs
Still have time to increase using bonuses, raises, granting more retirement or profit sharing
Limited to $15k per employee
The information provided by the North Alabama United Methodist Foundation is meant to introduce issues to consider during the 8 week PPP Loan period. Refer to SBA issued documents and instructions for specific rules and guidelines on loan forgiveness.