SBA Payment Protection Program Forgiveness
Last updated June 30, 2020
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SBA PPP Forgiveness Guidance
Congratulations on receiving a Paycheck Protection Program (PPP) loan from Johnson Financial Group (JFG). The PPP, as part of the CARES ACT, allows for a portion or all of your loan to be forgiven if proceeds are used to cover eligible expenses. The following is a summary as of June 30th, 2020. As new details are provided by the SBA, we will continue to update this site with our latest guidance.
- Your loan can be forgiven up to the full principal amount, along with any accrued interest. However, there are a number of factors that may limit the amount eligible for loan forgiveness.
- The amount of your loan can only be forgiven up to the sum of the eligible expenses (listed below) incurred, and payments made, during the 8-24 week period beginning on the date of receipt of the loan proceeds from the lender (the “covered period”).
- To maximize forgiveness, a minimum of 60% of the loan amount must be used for eligible payroll expenses, and no more than a maximum of 40% of the amount forgiveness may be used for eligible non-payroll expenses.
- Your loan forgiveness amount could be further reduced if you (1) fail to maintain the same number of full time equivalents during the covered period, compared to a defined lookback period and/or (2) decrease wages paid by more than 25% for employees making less than $100,000 per year.
- Adequate documentation regarding the tracking of these expenses will likely be required.
While additional details are forthcoming, here is what we know and can share as of June 30th:
- The Paycheck Protection Program Flexibility Act of 2020 (‘PPP Flexibility Act’), which was signed into law on June 5, 2020, modifies the loan forgiveness process and provides significant benefits to PPP loan borrowers.
- The SBA has announced that it will issue additional guidance and a revised loan forgiveness application that complies with the PPP Flexibility Act.
- The SBA has issued both SBA Form 3508 Standard and 3508 EZ, Schedule A and a Schedule A Worksheet to help with the forgiveness process.
- To make this process most efficient, JFG will be using an online portal for your forgiveness application, and to upload any required documentation.
- The JFG online portal will assist you with the selection of the proper application.
- Once clients are eligible to apply for loan forgiveness, clients will be sent an e-mail with instructions for processing through the JFG PPP Forgiveness portal.
- We hope to have all clients granted access to the portal by the end of July 2020.
- Submission of the application will occur via the portal and be completed with an electronic signature through the portal.
- As a reminder, 8 weeks after your loan was disbursed is the earliest you can begin preparing for the forgiveness process.
- Borrowers have 10 months after the end of the covered period (8-24 weeks from disbursement) to submit an application.
- There is no immediate action needed to complete/submit SBA Form 3508 Standard or 3508 EZ.
- In order to prepare, you must first determine which forgiveness application you will be using.
- Again, the JFG online portal will assist you with the selection of the proper application.
- If you would like to begin preparing now, we recommend you connect with your Attorney or Accountant for specific guidance for your business.
- For additional details, please visit the U.S. Small Business Administration Paycheck Protection Program.
- A borrower must be past the 8-24 week covered period post disbursement, and have used the PPP funding in the correct prescribed way as per the SBA forgiveness requirements.
- Once they receive access to the portal, they must login within 72 hours to initiate the process.
- The client will be notified via the online portal, if any additional information is required.
- The U.S. Treasury and Small Business Administration (SBA) are responsible for the rules of the program which determine the amount of loan forgiveness you may receive. This can include full, partial or no forgiveness.
- We encourage you to visit the SBA website for the most up-to-date program rules and guidance.
- JFG has 60 days to review a fully completed application for forgiveness.
- After JFG submits the application to the SBA, according to the SBA Interim Final Rule on Forgiveness, they have 90 days to review, approve and fund the application.
- The borrower will be notified by JFG when the SBA accepts the application and approves it for Forgiveness.
- Salary, wages, commissions, or tips (capped at $100,000 on an annualized basis for each employee);
- Employee benefits including costs for vacation, parental, family, medical, or sick leave; allowance for separation or dismissal; payments required for the provisions of group health care benefits including insurance premiums; and payment of any retirement benefit;
- State and local taxes assessed on compensation; and
- For a sole proprietor or independent contractor: wages, commissions, income, or net earnings from self-employment, capped at $100,000 on an annualized basis for each employee.
Click here to learn the key facts and the answers to common questions employers are asking our advisors
- Rent (in place prior to Feb 15, 2020);
- Utilities on rented or owned business property in the name of the applicant (Not homesteads);
- Interest on mortgage debt obligations of the applicant (in place prior to Feb 15, 2020)