PPP Loan Forgiveness Update (6/25/20)
As many of you know, a bill that was proposed in May to make the PPP loan forgiveness rules simpler to understand and more lenient to comply with. It was passed into law. Here are the updated rules to help you understand and stay on track.
- You will need to certify that the PPP loan money should be used for the following eligible expenses:
Payroll – wages, vacation, leave (parental, family, medical or sick) and employee benefits (group health, life, disability and employer retirement plan contributions).
Rent – as long as the agreement was signed before 2/15/2020.
Utilities – gas, water, electric, phone, internet, etc., as long as service began before 2/15/2020.
Mortgage Interest – if you own the property and the mortgage originated before 2/15/2020.
- The eligible expenses can be incurred/paid over a 24-week Covered Period starting from the date that your lender transferred the money into your account. You can elect the 8-week Covered Period if you want.
- You will need to certify that at least 60% of the amount of the loan money used must be used for eligible payroll expenses. You will need to certify that you did not reduce salaries or hourly wages by more than 25% during the covered period or Alternative Payroll Covered Period compared to the period between January 1, 2020 and March 31, 2020.
- You will need to certify at least one of the following items:
You did not reduce the number of employees or the average paid hours of employees between January 1, 2020 and the end of the Covered Period (exceptions – if the reduction arose from an inability to rehire employees from February 15, 2020, if you were unable to hire similar qualified employees, if you offered to restore hours and the employee refused).
You were unable to operate your business between February 15th, 2020 and the end of the Covered Period due to compliance with requirements established between March 1, 2020 and December 31, 2020 by the HHS, CDC or OSHA related to the maintenance of standards for sanitation, social distancing, or any other work or customer safety requirements related to COVID-19.
- You will need to complete the simplified, one-page PPP Loan Forgiveness Application Form 3508EZ (see attached sample)
Source: PPP Loan Forgiveness Application Form 3508EZ (View the Form Here: PPP Application 6.2020)
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.