Ppp Loans Forgiveness For Self Employed - Have you received or plan to apply for a Paycheck Protection Program (PPP) loan? Read on to learn more about PPP loans and how to apply for PPP loan forgiveness.
Note: There is still time to apply for a PPP loan! The application deadline has been extended to August 8, 2020. If you still want to apply for a loan, we recommend applying immediately through PayPal or Kabbage. We have personally had great luck with our clients with both of these lenders. Most of our customers have received money within a few days. If you need help applying for a PPP loan, schedule an appointment from our appointment calendar. Even if you haven't filed your 2019 taxes yet, you still need to have a completed Schedule C.
Ppp Loans Forgiveness For Self Employed
We'll help you register with BNC Tax for PPP credit waiver advice, navigate the rules and collect the documents you need to apply for a PPP credit waiver.
Further Guidance Concerning Forgiveness Of Paycheck Protection Program Loans
The Payroll Protection Program (PPP) is a business loan program that was signed into law by Congress in March as part of the Coronavirus Relief, Assistance, and Economic Security Act (CARES Act).
PPP provides a framework for businesses to apply for low-interest loans specifically for paying employees, business rent or lease payments, mortgage interest, and utility bills during the coronavirus pandemic. The goal is to protect workers' incomes, maintain business stability, and help stabilize the economy.
Businesses can apply for a loan of approximately 2.5 times the average monthly salary. The interest rate on the loan is 1%. Loans issued before June 5 are granted for a period of 2 years. Loans issued after June 5 are granted for a period of 5 years.
PPP loans are administered by the Small Business Administration (SBA). SBA loans can be partially or fully forgiven if the business uses the funds for qualified expenses. Click here to read more about PPP on the SBA website.
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Requirements for PPP loan forgiveness are still changing, but the current requirements are outlined in the PPP Flexibility Act.
The only legal guidance available is the PPP Flexibility Act signed on June 5, 2020. More rules are being proposed that could come into effect later this year, but for now we have to stick with the PPP Flexibility Act. Below are the requirements for debt forgiveness.
Enterprises that received a PPP loan before June 5 can use an 8-week or 24-week insurance period.
Businesses that received loans after June 5 will benefit from a grace period of 24 weeks or from December 31, whichever comes first.
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For businesses that received loans after July 16, the full 24 weeks of the closing period will not count because December 31 is 24 weeks from July 16.
You have to spend the amount during the insurance period and apply for loan waiver after the covered period. December 31, 2020 is the deadline for payment of eligible expenses. After the closing period, you can apply for loan forgiveness for up to 10 months.
To be eligible for PPP loan forgiveness, you must spend 60 percent of the loan on salary expenses. This includes paying employees or paying yourself if you're self-employed. Payroll costs include wages, salaries, vacation pay, parental/family or medical leave, sick leave, health benefits, and bonuses (with some limitations) .
You can spend the remaining 40% on business mortgage interest, business rent and leases, and utilities. This includes electricity, water, gas, sewer, telephone (including cell phones and landlines), internet and transportation costs. All mortgage, rental/lease and utility contracts must be in effect by February 15, 2020 as eligible expenses for PPP loan forgiveness.
Ppp Loan Forgiveness
To be eligible for PPP loan forgiveness, you must maintain your workforce. This means that you should have the same number of full-time employees for an average of three periods during the year. There is a calculation to determine whether you have retained your number.
Take A and divide by B1. Do the same with B2. Take the largest number obtained. If you are a seasonal employer, you must go to B1.
It's important to note that your workforce doesn't have to be the same number of employees, just the same NUMBER of employees.
Employees are exempted from employment. You may still be eligible for debt forgiveness if you can't find suitable employees or can't afford to hire employees for security reasons.
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In 2019, you must withhold at least 75 percent of gross wages for each employee whose annual salary does not exceed $100,000. If the employee's salary is less than 75% of the most recent salary in the quarter, the amount eligible for remission may be reduced by the difference between the current salary and 75% of the initial salary.
Self-employed people can get 100% debt forgiveness up to $100,000 because as a self-employed person, your profit is your salary. This means you meet the criteria of spending at least 60% of your debt on wages.
Just like businesses with employees, sole proprietors can apply for loan forgiveness for up to 10 months.
Some businesses do not qualify for 100% loan forgiveness and must pay a portion of the loan. Here are some things you need to know about PPP loan repayment.
Paycheck Protection Program: Ppp Loan Forgiveness
Some lawmakers have proposed blanket legislation to forgive all PPP loans up to $150,000. It's being seriously considered and PayPal even has a petition for it, but it hasn't become law yet.
Another round of PPP loans is also under discussion. This second type will be more limited. For example, it only applies to businesses that have lost a certain percentage of revenue or have to close due to local or state mandates.
The application form for PPP loan forgiveness is called SBA Form 3508 or SBA Form 3508EZ, depending on your situation.
Applications for PPP loan forgiveness require a lot of information. This blog post covers some of that information, but not every detail. It is important that your payroll company and accountant are involved in completing this application. We do not recommend doing this yourself.
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Have you received PPP funds? Do you need help filling out a PPP loan forgiveness application? Book an appointment with BNC Tax today. As of June 16, 2020, two separate applications can be completed when applying for Paycheck Protection program loan forgiveness. One of them is form 3508EZ. This is a very short and simple form for sole traders.
The most common form used by many employers is not the easiest form to fill out. The form is called SBA Form 3508. This blog will cover each section and show you the correct way to complete it to ensure your loan is forgiven. Attached below is a downloadable PDF version of the form to help you follow along as you review each section.
Business Legal Name (“Borrower”) DBA or Trade Name, if applicable: Enter the business name you used on the PPP application. This name must be the same as the name you used on your tax return.
Business Address/Business TIN (EIN, SSN)/Business Phone/Primary Contact/Email Address: If any information does not change, use the same information as on your PPP application.
A Summary Of Ppp Loan Forgiveness Time Periods
SBA PPP Loan Number: You enter the loan amount assigned to you by the SBA at the time of loan approval, which you can request from your lender if needed.
Lender's PPP Loan Number: The number assigned to your loan by the lender in their systems. You can find this in the loan documents you sign. If you can't, your lender can provide it.
PPP Loan Amount: This will be the full loan amount you get. You can confirm this amount through your bank records, PPP loan agreement or confirmation email. Your creditor will not receive any payment or receive any amount.
PPP Loan Disbursement Date: The date the money reaches your bank account. If sent financially, enter the first date.
Ppp Loan Forgiveness Application And Instructions Released By Sba — Current Federal Tax Developments
Employees at time of loan application/Employees at time of application for forgiveness: Enter actual employees, not full-time equivalents (FTEs).
Payroll Schedule: Select the frequency of payroll to be paid to employees. If this has changed since 2019, select the frequency you will use during the 8-week grace period.
Payment term: Count up to 24 weeks (168 days) from the date of payment. If you used the loan before June 5, 2020, you can use the 8-week (56-day) period. The term of protection should not exceed December 31, 2020.
Alternate Payroll Period: If you pay weekly or
Ppp Forgiveness For Owner Compensation Replacement
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