June 24th: Could This Be The Final PPP Forgiveness Update?As its new normal, the SBA released last Friday afternoon (June 19th) what could possibly be the final updated guidance to the Paycheck Protection Program (PPP) loan forgiveness process. Could this be the FINAL PPP loan forgiveness update? Perhaps, but that’s up to Congress and the SBA. We shall simply interpret the language as best we can and make sure anyone with a PPP loan understands how best to get the maximum amount forgiven. To that end, we have updated both our PPP Loan Forgiveness Calculator and our PPP Loan Forgiveness Guide. Both are free, and you can download them by clicking the button below.
What’s New in PPP?The biggest change is that there are now TWO PPP Loan Forgiveness Applications. The standard application, SBA Form 3508, and the new short form SBA Form 3508EZ. It is appropriate that the SBA has named the new short form “EZ”, since we and others have compared the standard form 3508 to a business tax return for its complexity. Only certain PPP borrowers are eligible to use Form 3508EZ. Those borrowers need to meet ONE of these criteria, from yesterday’s SBA press release:
- Are self-employed and have no employees; OR
- Did not reduce the salaries or wages of their employees by more than 25%, and did not reduce the number or hours of their employees; OR
- Experienced reductions in business activity as a result of health directives related to COVID-19, and did not reduce the salaries or wages of their employees by more than 25%.
Other Changes to PPP ForgivenessThe Paycheck Protection Flexibility Act of 2020 (PPFA) was signed in early June, and allows for the following changes to PPP forgiveness.
- The term of PPP loans made after June 5th, 2020 was extended to five years.
- The ratio of payroll to non-payroll costs eligible for forgiveness changed from 75%/25% to 60%/40%.
- The forgiveness period changed from 8 weeks to 24 weeks with an option to continue using an eight-week period.
- The new application instructions added new limits on compensation and other eligible payroll costs for owners.
- The SBA also issued a new interim final rule this week with guidance on calculating loan forgiveness related to employee and owner compensation during the new 24-week covered period described in the PPFA.
What’s Next for Small Businesses and PPP?Believe it or not, there is still PPP loan money available. Small businesses impacted by COVID-19 can still apply for and get a PPP loan. While this latest change could be the final change to PPP forgiveness, we expect the SBA to continue updating its guidance for PPP loan forgiveness as more and more businesses begin the forgiveness application process and more questions arise. If your business received a PPP loan, you should download the SBA forgiveness application or Form 3508EZ, whichever is appropriate, and begin to prepare for your actual forgiveness application. If you are like most people, you will need help from your accountant. We encourage you to invite your accountant to join our network and help you complete and submit your PPP forgiveness application through your bank via our portal. Invite your accountant here or find a virtual accountant here.
As of this writing, the rollout of the SBA PPP (Paycheck Protection Program) is 2 weeks old. From everything we can gather, at this time, hundreds of thousands of "small businesses" have applied for a forgivable SBA PPP loan. The SBA continues to issue "guidance" in the form of Frequently Asked Questions and answers. The headlines continue to ring with negative news about the rollout, including one that says the SBAs computer systems crashed and another that said the SBA is struggling to meet the demand for these loans. That shouldn't surprise anyone, given the speed and size of this program rolled out by the Federal Government. The SBA is responsible for $349 Billion in loans to small businesses, but the banks, credit unions, and other lenders are the entities who have to actually do all the intake for the loans. The SBA PPP is a big, huge, government program, and it's going to have lots of issues. There are more than 30 million small businesses in the United States today. How many of them are suffering in the wake of COVID-19 and the corresponding government shut downs? A LOT! We're trying to make the process a little easier on everyone.
The All Encompassing SBA PPP Guide (free download)We've created a simple, but thorough guide to the process from the borrower's (small business) perspective, answering the following questions:
- What is the SBA PPP?
- Who is eligible for an SBA PPP Loan?
- What can you use these funds for?
- How much can you borrow?
- How do you calculate how much you can borrow?
- What info do you need to apply for an SBA PPP Loan?
- What amount of the loan is forgivable?
SBA PPP Explainer VideosYou can download and read the guide, or get the shorter (slightly more entertaining) version in this video on youtube. It literally answers exactly the same questions as we've listed above. Also, we're sharing more videos almost on a daily basis as we learn things that will help both borrowers and lenders.
Calculate Your Average Monthly Payroll CostsWe've published a calculator (MS Excel & Google Sheets) for small businesses to use to calculate their average monthly payroll costs and to give to their lender to provide thorough documentation of their average monthly payroll costs. You input your numbers, and the calculator generates your maximum loan amount. Remember, the SBA PPP help small businesses through about 2 months or so of payroll to keep employees employed, so your business can stay in business after the pandemic has ended.
Apply for sba ppp loan onlineWe've created (what we believe is) the easiest online SBA PPP application in the world! OK, let's not get carried away, but it's really good. So, if you're a small business, you can apply using our online application. If you're a lender of any kind, and you're struggling with the volume of applications, you can adopt ours. We made the process plug and play for lenders, really easy to get started, and we're standing by ready to help you get onboarded so you can accept more applications and fund more loans. Apply online for an SBA PPP Loan here.
Virtual accountants and bookkeepers to help youFinally, last year, we rolled out our virtual accounting and bookkeeping services, and we've got a network of over 400 vetted accountants and bookkeepers ready to go to help you get through this application process. We base our matches for you on these criteria:
- Accounting Needs
- Business Objectives
- Bookkeeping Requirements
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