It’s now time to build you case to ask for loan forgiveness if your business received a loan from the Small Business Administration (SBA) Payroll Protection Program (PPP). That’s because there is now guidance on filling out the new Loan Forgiveness Application.
Around three quarters of small businesses in the United States requested relief from the SBA PPP loan program to help make payroll, loan and rent payments due to the recent pandemic. As long as 75% of the loan proceeds are used for payroll related purposes some or all of the loan can be forgiven. To reduce your loan due, an application to formally request forgiveness is required. Here is what you need to know.
The loan forgiveness application and instructions is a bit overwhelming and includes an application, schedule and worksheets. Here some suggestions to help think through the process.
Work with your lender. As with the loan process, your forgiveness request must be submitted to the bank that administered and funded your PPP loan. You will need to ensure your request meets the SBA guidelines AND theirs.
Review the application. The new application can be found here:
Identify your period. You will need to determine the eight week covered period for loan forgiveness. This “Covered Period” starts on your PPP loan disbursement date and ends 56 days later. There is an Alternative Payroll Covered Period to help align this period with how you pay your payroll.
Calculate your safe harbor. To maximize your loan forgiveness you must show that you retained your employees and their pay during the Covered Period. While this calculation can be cumbersome, there is relief if an employee refuses to return to work, voluntarily leaves, or is removed for cause. Remember this is not an all or nothing proposition. You can still receive a percent of payroll as relief if some of your employees are no longer with you.
Get your documents in order. Some documentation will need to be submitted with your application but other documents will need to be retained. You must save all supporting documentation for six years after the date the loan is forgiven or is repaid in full. As with support for tax returns, you will need separate documents confirming the obligation and others that show you made the payments.
What is eligible for forgiveness. The basic expenses eligible for forgiveness include payroll, cost of employee benefits, covered mortgage obligations on real and personal property, rent obligations and covered utility payments. Review the Federal Register and the Loan Forgiveness Application for details.
Remember the limits. Recall that payroll is limited to $100,000 annualized salary or less for each employee and only 25% of the amount forgiven can come from non-payroll expenses. Employees must be residents of the United States, and you may not be reimbursed for federal employment taxes including Social Security and Medicare. The amount of forgiveness will also be reduced if your business received funds from the Families First Coronavirus Response Act or EIDL program.
This is only a summary of the forgiveness application. Now is the time to start getting your application and related documentation in order. Your bank should be giving you guidance on how they are going to handle the processing of your request.
Last updated: 05/26/2020
This Site and the Mostad Cloud Services content are intended for customers of Mostad Cloud Services. You may not use this Site or any of the content for any purpose not related to your business with Mostad Cloud Services. You are specifically prohibited from: (a) downloading, copying, or re-transmitting any or all of the Site or the content without, or in violation of, a written license or agreement with Mostad Cloud Services; (b) using any data mining, robots or similar data gathering or extraction methods; (c) manipulating or otherwise displaying the Site or the content by using navigational technology, framing, or similar technology; and (d) using the Site or the content other than for its intended purpose. Such unauthorized use may also violate applicable laws including but without limitation to copyright and trademark laws, the laws of privacy and publicity, and applicable communications regulations and statutes.
You represent and warrant that you will comply with all applicable laws and regulations, including, without limitation, those relating to the Internet, data, e-mail, privacy, and the transmission of technical data exported from the United States or the country in which you reside.
You acknowledge and agree that all content and information on the Site is protected by proprietary rights and laws.
You agree not to modify, copy, distribute, transmit, display, perform, reproduce, publish, license, transfer, create derivate work from, sell or re-sell any content or information obtained from or through the Site.
The Site may contain links to other websites maintained by third-parties. These links are provided solely as a convenience and does not imply endorsement of, or association with, the party by your accountant, your tax professional, or Mostad Cloud Services or its affiliates
Mostad Cloud Services reserves the right to change or modify any of the terms and conditions contained in this Agreement at any time. You acknowledge and agree that it is your responsibility to review the Site and these Terms of Service from time to time. Your continued use of the Site after such modifications to this Agreement will constitute acknowledgment of the modified Terms of Service and agreement to abide and be bound by the modified Terms of Service.
Mostad Cloud Services shall have the right to immediately terminate or suspend, at its discretion, your access to all or part of the Site with or without notice for any reason.
You expressly agree that use of the Site is at your sole risk and discretion. The Site and all content and other information contained on the Site is provided on an "AS IS" and "AS AVAILABLE" basis without warranty of any kind, whether express or implied. Mostad Cloud Services makes no warranty that (I) the Site and content or information will be uninterrupted, timely, secure or error-free, (II) the results that may be obtained from use of this Site will be effective, accurate or reliable. The Site may include technical mistakes, inaccuracies or typographical errors. Mostad Cloud Services reserves the right to change the Site content and information at any time without notice.
In no event shall Mostad Cloud Services or its affiliates be liable for any indirect, incidental, special, punitive damages or consequential damages of any kind, or any damages whatsoever arising out of or related to your use of the Site, the content and other information obtained therein.
Certain jurisdictions prohibit the exclusion or limitation of liability for consequential or incidental damages, thus the above limitations may not apply to you.
At Mostad Cloud Services, we respect the intellectual property rights of others and expect our users to do the same. Our Terms prohibit users from violating someone else’s intellectual property rights, including copyright and trademark.
If you believe content that belongs to you is being used through our Services or Websites without your permission, we want to know about it. You can send notice of the alleged infringement to our designated agent:
If you do send us a notice, please note that we may forward your notice, including your contact information, to the user who posted or used the content that you are complaining about. If you're not sure whether content on one of our Websites or sent through our Service infringes your intellectual rights, then you may want to speak with legal counsel in your area before notifying us.
Finally, before sending us a notice you may want to reach out to the person or organization who posted or used the content you believe infringes your rights. You may be able to resolve the issue directly with that person or organization without contacting Mostad Cloud Services.
When reporting a claim of copyright infringement, please ensure your notice includes the following:
When reporting a claim of trademark infringement, please ensure your notice includes the following:
This agreement was last updated on April 20, 2020.
You can contact Mostad Cloud Services with any questions at
9655 Penn Ave S
Minneapolis, MN 55431
Call us at 800.888.5803