With new updates occurring all the time from the IRS, the Paycheck Protection Program is taking shape. Here's what you need to know about getting your PPP loans forgiven.
First, you will need some basic materials to give to your lender as well as a certification form; this will include but not necessarily be limited to a P&L (income statement) for the 8 weeks the loan covers, pay stubs for your employees who were paid during that time, and payroll summaries from your payroll provider to verify total costs reported on your P&L.
You will then need to certify the information and to state that the cap per individual did not exceed the maximum of $15,385. This is to ensure that as the business owner who gets loans, you do not just pay yourself a massive bonus from the funds and get the loan forgiven while also still not re-hiring or retaining your employees.
Your lender may require additional information or documentation; if you are already a Formations customer you will have access to any and all data, they ask you for. If you are not yet a Formations customer then now is the time to sign up, get your books up to date, and clean in advance of needing to show them to your lender. Reach out to us today for a free consultation.
On June 4th, 2020, the US Senate has passed a bill to extend the forgiveness period of PPP loans from 8 weeks to 24 WEEKS.
Now, this does not authorize more funds for businesses to receive from their lenders (i.e. you will not get 24 weeks of payroll funds to use) but rather just give businesses more time to use the funds they've already received.
While this doesn't benefit S-corps with only owner payroll it does allow for some businesses who have had difficulty getting their payroll back to the level it was before the emergency shutdown orders went into place more time to apply the funds to the forgivable categories.
FAQ about Loan Forgiveness:
- Now that the loan amount has been used to pay for payroll, what's next?
There should be some sort of forgiveness application sent to you from the bank/lender to fill in and submit for the bank to approve. This may be on the bank website or sent via email as a link.
- When do we need to start paying anything back?
I believe there is a moratorium on repayment for at least 6-12 months but that would likely be in the language of your loan agreement or stated in the forgiveness application, or possibly after the application is reviewed and processed you will get notices from the bank on when the repayment (if any) is required.
- What else do we know that will help us prepare to have it completely forgiven, if possible?
Nothing really; the other applications for forgiveness we’ve seen are very basic and come with requests to show documentation to back them up, all of which you will have available from us as a Formations customer.