PPP Forgiveness – 6 Things You Should Know

Things are changing rapidly when it comes to the forgiveness of Payroll Protection Program loans. Here are six key takeaways from PBO Advisory Group’s recent PPP Loan Forgiveness webinar that businesses need to know about getting a loan forgiven.

1. When to Apply. As of now (October 22, 2020), according to SBA regulations, you must apply 10 months from the date your loan was funded or by 10/31/2021, whichever is sooner. However, new guidance continues to be released so these dates may change. To be sure you are filing in time, we suggest you check with the lender that funded your loan as to when you should file.

2. Three Forgiveness Forms. The government has three forms which businesses will use to apply for forgiveness:

Form 3508S – issued on October 8, this form is for businesses that borrowed $50,000 or less. We are awaiting additional guidance from the SBA as this form may be made available to borrowers of $150,000 or less.

Form 3508EZ – a series of questions at the beginning of this form will determine if this is the correct form for your business. This form requires no supporting calculations and is easy to use.

Form 3508 – this is the long form which will require documentation of your payroll and other expenses. You will use this form if Forms 3508S and 3508EZ do not apply to your business.

More information, including links to the forms, can be found here.

3. Lending Expectations. Each bank may have its own requirements regarding documentation you must submit with your form, the process by which you submit your forgiveness package, etc. We advise you to contact your lender to determine its expectations.

4. Review Everything. Be sure your form and documentation are correct. If you are using a third party for some/all of your supporting reports, double check them. Some lenders are offering an online portal for forgiveness applications to be submitted. These portals may pre-populate some of the fields in your application, so you need to review everything carefully. Errors have been known to occur.

5. Will You Be Audited? The government has indicated that all borrowers that received loans of $2 million or more will be audited. This audit will include a review of your original application, so we suggest including it in your forgiveness package.

6. Tax Implications. The tax ramifications of PPP loans are still unknown. Congress has indicated that the IRS tax interpretations are not what was expected, and changes are being discussed. Until more guidance is issued, we suggest not to calculate your tax estimates.

Your business’ unique situation is going to determine how to apply for forgiveness. Our 45-minute webinar provides more detailed information. Please reach out to our webinar presenters Francesca San Diego or Scott Palka with your questions.