The Paycheck Protection Program (“PPP”) was designed to help small businesses keep their workforce employed during the Coronavirus (COVID-19) pandemic. In order to take advantage of this special loan program, businesses must complete and file Small Business Association (“SBA”) Form 3508, the Loan Forgiveness Application. This form must be completed by the borrower, according to the instructions, and submitted to the SBA Lender who will be servicing the loan. Borrowers can also submit this form electronically through their lender. You should confirm with your lender that they are participating in this program.
The loan is forgivable if the borrower keeps employees on their payroll for eight weeks and uses the funds towards payroll, rent, mortgage interest, or utilities. The Loan Forgiveness Application consists of three parts: PPP Loan Forgiveness Calculation Form, PPP Schedule A, and the PPP Schedule A Worksheet. There is an optional component to the application, the PPP Borrower Demographic Information Form, which requests information on the veteran status, gender, race, and ethnicity about each of the borrower’s principals.
The PPP Loan Forgiveness Calculation Form summarizes the types of payments and the amounts that are eligible for loan forgiveness.
The PPP Schedule A is used to calculate the total loan forgiveness amount based on the information provided on the Schedule A Worksheet, including any required reductions. Also, the PPP Schedule A lists the documentation that must be submitted along with the application.
The PPP Schedule A Worksheet is used to calculate the individual employee compensation that is eligible for forgiveness, determine the number of full-time equivalent employees of the borrower, and determine if there is any reduction in the total loan forgiveness amount based on prior calculations in the worksheet.
The Lender has 60 days to make a decision on your forgiveness application. According to the National Federation of Independent Business, 80% of small business owners have applied for a PPP loan and of those, 90% received funding. There is still much concern among small business owners regarding if they will be able to meet the requirements to have the loan forgiven under the current guidelines. The SBA and the Department of Treasury have said they will release more guidance for borrowers and lenders. Many businesses are reporting that it will be difficult for them to use the loan in the eight-week window and they may not be able to get employee headcounts back to the previous year numbers due to businesses being restricted in the number of customers allowed in their establishments. To view the application and detailed instructions for the loan please click here.