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Loan Forgiveness Assistance
The Paycheck Protection Program is a loan initiative implemented to provide a direct incentive for small businesses to keep their workers on payroll. The Small Business Association (SBA) will forgive loans if all employee retention criteria are met, and the funds are utilized for eligible expenses.
Important aspects of the program include:
- PPP loans have an interest rate of 1%.
- Loans issued prior to June 5 have a maturity of 2 years. Loans issued after June 5 have a maturity of 5 years.
- Loan payments will be deferred for borrowers who apply for loan forgiveness until SBA remits the borrower’s loan forgiveness amount to the lender. If a borrower does not apply for loan forgiveness, payments are deferred 10 months after the end of the covered period for the borrower’s loan forgiveness (either 8 weeks or 24 weeks).
- No collateral or personal guarantees are required.
- Neither the government nor lenders will charge small businesses any fees.
How to Apply
You can apply through any existing SBA 7(a) lender or through any federally insured depository institution, federally insured credit union, or Farm Credit System institution that is participating. Other regulated lenders will be available to make these loans once they are approved and enrolled in the program.
You should consult with your local lender to find out if it is participating in the program.
SBA Form 3508 is the document PPP loan borrowers must complete to request loan forgiveness. Form 3508EZ is a simplified document for eligible employers and solopreneurs. Unless you qualify to use the EZ version, you must apply with the regular Form 3508.
Like Form 3508, the EZ version requires borrowers to calculate payroll and non-payroll costs. But because of the eligibility requirements to use the form, you do not need to make adjustments for FTE and salary reductions.
Who Can Use Form 3508?
Any borrower who received a Paycheck Protection Program loan can use Form 3508 to apply for forgiveness. However, since it is the most complicated form, you should only use this form if you do not qualify to use Form 3508EZ.
Form 3508 is five pages long and broken down into the following sections:
- Calculation form
- Signature/authorization form
- Schedule A
- Schedule A worksheet
- Demographic information form (optional)
Form 3508 requires more calculations than the 3508EZ form because it has an additional calculation for borrowers who reduced their employee numbers and/or salaries. And like Form 3508EZ, the typical 3508 requires borrowers to calculate their payroll and non-payroll costs with the 60/40 rule.
Borrowers who minimize their full-time equivalent employees, employee salaries, or both also reduce their PPP forgiveness amount. This form has a calculation for evaluating how much you reduce your loan forgiveness amount for these adjustments.
Who Can Use Form 3508EZ?
Qualifying borrowers can use Form 3508EZ, the simplified version of Form 3508, to apply for PPP forgiveness. You can use this form if you meet one of the following requirements:
- Are self-employed and have no employees.
- Have employees but did not reduce their wages by more than 25%, did not reduce employee numbers, and did not cut employee hours, or have employees but did not reduce wages by more than 25% and could not operate as normal as a result of reduced business activity due to COVID-19 health guidance compliance.
Form 3508EZ is three pages long and broken down into the following parts:
- Calculation form
- Signature/authorization form
- Demographic information form (optional)
Get a Dedicated VCFO to Monitor Your Expenses
Gonzalez & Arrambide offer critical VCFO and accounting services to keep your bookkeeping and financials up-to-date—so you can apply for loan forgiveness knowing you have the support of a team of qualified professionals.