A GUIDE TO PPP LOAN FORGIVENESS
A guide to ppp loan forgiveness. The borrowers loan forgiveness will equal the smallest of the following: Your PPP loan amount: the maximum loan forgiveness amount less any reductions from. The maximum loan forgiveness amount where eligible payroll expenses equals or exceeds 60% of the total forgiveness of your eligible payroll expenses. What happens to loan amounts that are not forgiven ? For any loan amount that is not forgiven, the original loan terms–two year maximum loan at 1% interest rate with payments deferred until the date on which the amount of forgiveness is remitted to the lender–will apply. (For loans made after June 4, 2020 the loan term is five years.) What are the record keeping requirements ? Borrowers will be required to submit certain documentation with their loan forgiveness application. A guide to ppp loan forgiveness.
The documentation needed for forgiveness includes, Payroll documents. Bank account statement or third party payroll service provider reports documenting cash compensation paid to employees. Tax forms or equivalent third party payroll service provider reports for periods overlapping with the 24 work period for (1) payroll tax filings and (2) state quarterly wage reporting and unemployment insurance tax filings. Payment receipts, cancelled checks, or account statements documenting payment of employer contributions to employee health insurance and retirement plan. Full time employees. Documentation showing the number of Full Time Employees for the reference period. Documents may include payroll tax filings and state quarterly wage reporting and unemployment insurance tax filings.
Nonpayroll expenses. Business mortgage interest payments, amortization schedule and cancelled checks or lender account statements from February 2020 and covering the 24 week period. Business rent and lease payments. Copy of current lease and receipts or canceled checks or lessor account statements from February 2020 and covering the 24 week period. Business utility payments. Copy of invoices from February 2020 and the 24 week period after that. After the loan is forgiven the business owner should be prepared for the forgiven loan to impact their 2020 taxes. Using the forgiven loan, will limit how much you can write off on your business taxes.