We are heading into the last quarter of 2020, which should come as some relief for everyone.  This whirlwind of a year has brought unparalleled change and uncertainty into all our lives as a result of the novel coronavirus, COVID-19. As we seek a return to normalcy, we must deal with the aftermath of the financial relief programs that have helped the small business community stay afloat.

The Payroll Protection Program (PPP) loans administered through the Small Business Administration (SBA) have been one of the most popular relief programs among small businesses. These loans were designed to keep working Americans employed and help small businesses recover quicker once the pandemic is under control.  These loans are forgivable if used for eligible expenses and if other criteria are met.

The amount of the loan forgiveness may be considered by some to be overwhelming or unclear.  Many businesses undertook the PPP loans out of necessity and survival.  The criteria needed for forgiveness may have been an afterthought but as we near the end of the 8 or 24 week covered periods, it is time to start thinking about what documentation will be needed to obtain forgiveness of the loan.

Now what?

  • EZ Form:  The first thing you should do is see if you qualify to use the PPP Loan Forgiveness Application Form 3508EZ (EZ Form).  The EZ Form requires certain calculations and supporting documentation but is about half the size of the full form.  Click here to see if you qualify to use this form.
  • Payroll:  Ask your third-party payroll provider whether they have any templates or reports to assist in the PPP Loan Forgiveness process.  For example, ADP a popular payroll provider, has come out with a number of reports to assist their customers with the information needed for the PPP Loan Forgiveness and takes away a lot of the complicated and time-consuming calculations.   Paychex, Inc., a leading provider of HR, payroll, benefits, and insurance solutions, announced it has enhanced its PPP solution to generate a signature-ready application that simplifies the process of applying for PPP loan forgiveness for customers.

Eligible non-payroll cost support to gather:

  • Employer amounts paid for Employee health insurance – supporting payment receipts, cancelled checks, or account statements.
  • Employer amounts paid for Employee retirement plans – supporting payment receipts, cancelled checks, or account statements.
  • Employer State and local taxes assessed on Employee compensation – state quarterly business and individual employee wage reporting and unemployment insurance tax filings.
  • Business rent or lease payments –  current lease agreements and receipts or cancelled checks, or applicable lessor account statements.
  • Business utility payments – invoices, receipts, cancelled checks or account statements

Setting up your application:

PPPForgivenessTool.com is a free resource set up by a coalition of small business service providers, led by the AICPA and powered by Biz2Credit, who want to help business owners maximize their loan forgiveness for the Paycheck Protection Program (PPP) with as little effort as possible. Through this site, business owners will be able to fill out their forgiveness application online, get an automatic forgiveness eligibility calculation and automatically receive all the government-mandated forms they need to submit their application to their lender.  The AICPA has additional resources and guidance concerning all things PPP here.

While the situation is ever-evolving and the SBA is constantly coming out with new guidance, it is important for businesses to start gathering information they will need.  Lenders will start accepting loan forgiveness applications soon and it would be good to be at the front of the line when that happens.

The professionals at Isdaner & Company are available to provide consulting, agreed upon procedures and related services for PPP loan forgiveness matters. For more articles about PPP loans and other tax and business topics related to COVID-19, visit our special COVID-19 Tax & Business Implications section of our website.