To our clients:
If you have received the paycheck protection program (PPP) loan from the SBA you now have the ability to apply for the forgiveness part of this program. If you thought the application for the loan itself was strenuous you ain’t seen nothing yet. We have attached the application for forgiveness which the SBA released this week. This is an 11 page form which includes calculation forms as to how to compute the amount for the payroll to be forgiven and also instructions on the type of documentation you will need to provide your banker. One piece of information the SBA released last week relieves the borrower of less than $2 million in loans the need to prove that the loan was needed and was used for expenses you could have otherwise provide. If you did receive more than $2 million you will have to go through that exercise with your banker, the rules of which the SBA has not released.
As most of you probably realize the costs you can use for this loan and that are eligible to be forgiven are 1) Payroll costs, consisting of employee compensation of salary, wages, commissions, vacation, medical or sick leave, or allowance for separation or dismissal, payment for employee benefits, including insurance premiums and retirement, payment of state and local SUI, 2) a)interest of mortgage obligations, b)rent or leases on real or personal property and c) utility payments for gas, water, electric, telephone or internet. Wages for each individual will not be allowed for amounts greater than an annualized rate of $100,000 or $15,384.62.
The payments of 1 above must be in the 8 week period starting with the date you received the loan proceeds or for 2) above paid or incurred within the same 8 week period. The amount of loan forgiveness may be subject to reductions as explained in the PPP Schedule A for of the attached application.
On page 10 of the application includes the documentation that your banker will need to complete the application. Items will include bank statements or payroll reports documenting the amounts of payroll, payroll tax filings such as 941 forms and SUI forms, receipts or cancelled checks for employee benefits paid. Non payroll documentation will include lender amortization schedules for interest payments, rent or lease agreements and cancelled checks and utility invoices from both February 2020 and the 8 week covered period.
Remember this is an application and must be filed by you with your lender no later than October 31, 2020. Our guess is the sooner you get this information together and to your lender the better.
If you have any questions or feel you need help completing this application or simply need someone to review your computations feel free to contact us and we will help you get through this application quickly and completely.
McBeath, Fates & Ivers, P.C.