Page 29 - BusinessWest October 26, 2020

PPP Loan Forgiveness 101
Pay Attention to Detail in Submitting the Forms for Forgiveness
PBy Jeff Laboe, CPA
lease realize that the informa-
tion available today is different
than it was a four months ago, and will most likely look different two months from now, so keep that in mind while reading this article.
With all the uncertainty these days, the last thing taxpayers should be wor- rying about is how to complete the application for your Paycheck Protec- tion Program loan forgiveness. The intent of this article is to give taxpay- ers an idea of the application process and forms that need to be submitted for forgiveness of the PPP loan the business received.
“With all
the uncer-
tainty these
days, the
last thing
taxpayers
should be worrying about is how to complete the application for your Pay- check Protection Program loan forgiveness.”
A business of any type (LLC, S-corp, sole proprietor, etc.) that received funds via a PPP loan in 2020 may apply for the forgiveness of repayment of this loan. Taxpayers who received a loan, maintained proper records, fol- lowed the Small Business Administra- tion rules and guidelines with respect as to how the loan proceeds were spent, and performed all necessary calculations should qualify for forgive- ness on the repayment of the loan or the portion of the loan that qualifies.
There are three different appli- cation forms that may have to be completed based upon your indi- vidual PPP loan program. You have 10 months from the completion of your loan period to file one of these forgive- ness applications. The three forms to be used are Form 3508S, 3508EZ, and Form 3508, or the equivalent forms offered by your bank.
The first is Form 3508S, which can be used only by those who received $50,000 or less in PPP loan proceeds. The application asks taxpayers to pro- vide the forgiveness amount requested
and to certify with signatures that all the conditions were met. There are no calculations required on the applica- tion and no reductions in forgiveness due to reduced head count or sala- ries or wages. This form is the most straightforward.
Form 3508EZ may be used by self- employed individuals, independent
contractors, or sole proprietors that have no employees and/or wages at the time of the loan-application process.
A business also qualifies to use this form if it received more than $50,000 but less than $150,000 in PPP funds, and met one of two additional scenarios:
• Salary and wages were not reduced by more than 25% during the loan period, and the employee head count was restored by the end of the chosen loan period — essentially, the net head count wasn’t affected; or
PPP Loan
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