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PPP Loan Forgiveness Application

Today we’re going to be taking a look at the PPP Loan Forgiveness Application, which was released on Sunday, May 18. We’re going to go through it. I am recording a video of this as well, which will allow us to, if you’d like on our website, I’ll have a link to the video. We’ll have our standard transcript. We’ll have a link to the forgiveness application itself. But if you’d like to watch a video where we go through it together, that would be awesome. As I said, I’m going to record that, and this way we can work on it together and kind of go through it piece by piece. So open that up now. 

Now, in the meantime, if you haven’t already, please subscribe to our podcast and notifications at peopleprocesses.com we’re also available on iTunes, all the podcatchers of your choice, Google podcasts, Stitcher, whatever you’d like Spotify, check us out on there so that you know when we have great updates like this. 

Now, I’m going to switch over and I’m now sharing my screen. So let’s take a look and dive in. 

Okay. So the PPP Loan Forgiveness Applications, this goes first of all back to your lender, it does not just get sent off to the SBA, that’s a very important thing to know. You want to start with that now, there’s a lot of different pieces to it. There’s a calculation for us, a couple different schedules and worksheets, demographic information form, which is optional. The primary things that you must do are the Forgiveness Calculation Form and Schedule A. There’s also like I said, a worksheet on that so that you can kind of calculate some of them.

Now, there are lots of definitions on the first page. There’s a couple of pretty straightforward ones. Your PPP Loan Number, your Business Legal Name, all those. There are a few key ones, the PPP Loan Disbursement Date, this is the date that an Employee looks, sorry, the Loan Disbursement Date, this is the date that the money hit your account. Okay? So you need to have this, I didn’t realize that my screen wasn’t sharing. So I apologize. That’s why I slipped up there for a minute. So the date you received the PPP loan proceeds from the lender if the loan proceeds were treated on more than one date into the first date on which you received PPP loan proceeds. Now one question we have at this time is if you’ve received the money, they pulled the entire amount back and deposited a different amount. Which one do you use? Ask your lender. But most people seem to be thinking that this is going to be the latter date even under that scenario. If you received multiple disbursements to come up to a certain amount, then it would be the first one. 

If you have EIDL numbers, those sorts of things go in there. This is important because we’re going to ask about the Payroll Schedule and the Payroll Schedule affects the covered period. Enter the eight weeks which is a 56-day covered period of your PPP loan. The first day of the coverage period must be the same as the PPP loan disbursement date. If you receive your proceeds on, for example, Monday, April 20. the first day of the cover period is April 20 and the last day of the cover period is Sunday, June 14. Now, this is very important. There is an alternative payroll cover period you can use. This is for administrative convenience borrowers with a bi-weekly or more frequent payroll. So those are your weeklies as well, may elect to calculate eligible payroll costs using the 56-day period that begins on the first day of their first pay period following the PPP Loan Disbursement Date. For example, if the borrower received its PPP loan proceeds on Monday, April 20, and the first day of its first pay period following, its PPP loan disbursement is Sunday, April 26. Then the first day of the alternative payroll covered period is April 26. And the last day would be June 20. Borrowers who elect to use this must apply the alternative payroll cover period, whenever there is a reference in this application to the covered period or the alternative payroll cover period. However, there are a few places where it asks to the covered period only, and that would be the original one for your eight weeks afterward. And it’s mainly just for there, it’s so that you don’t put the wrong dates in there. So you have to disclose both the normal cover period and the alternative cover period if you’re going to use that. If you received loans over 2 million, you must check a special box. That’s we’re going to audit your box, so that’s important. Okay.

Now I’m going to hop on down. There’s a lot of different kinds of explanations there, but I’m gonna go to the application. We’re now on Page 3. It looks like a pretty straightforward form, Business Legal Name, DBA name, Business Address, ID, that kind of thing. Your Loan Number, your Lenders Loan Number, you may need to leave that blank and sent it to them. The Loan Amount and the Disbursement Date. The Employees at the Time of the Forgiveness Application, if you did an EIDL you have to put those in there. Then we mark our payroll schedule, and we put in the covered period, this is always the eight weeks following 56-days when your loan was dispersed. If you’re bi-weekly or weekly, you can then select the alternative payroll covered period, going to the first pay period, starting after your disbursement. If the borrower together with affiliates received PPP loans over 2 million, you check this box now then you’re adding all the pieces together. So first is Payroll Costs then Business Mortgage, Interest Payments, Business Rent, and Business Utility. 

Let’s talk about payroll costs. So there’s a Schedule A, Line 10, which we can scroll down and it asks you, enter your cash compensation, enter your leisure hours and salaries. Hang on. Here it is, down here. So it’s kind of a selection, enter your cash compensation, enter your average FTEs, the total amount paid by the borrower for employer contributions to employee health insurance. The amount paid by the borrower for employer contributions to employee retirement plans. The amount paid by the borrower for state and local taxes assessed on employee compensation. You also have to disclose separately the total amount to owner-employees or self-employed individuals, general partners. So you don’t double count those. Okay? So put those together, you add it all together that gives you your total payroll costs. So going back to the original application, there are your Total Payroll Costs, plus your Business Mortgage Interest, your Rent, and your Utilities. That gives you your payroll and non-payroll costs and that is the sum of what is forgivable. You then adjust that for your full-time equivalency and salary wage reductions. Now, these are all part of Schedule A, again, they break this down. So, what you have to do is say enter the, I won’t find the exact numbers for you so that we don’t go here, Schedule A. 

All right. So, determine if the pay was reduced by more than 25%. To do this, you enter the average annual salary or hourly wage during the covered period. You enter the average annual salary between January 1, 2020, and March 3, 2020. And you divide the values by 1.a and 1.b. If 1.c is 75% or more, enter zero otherwise proceed to Step 2. If January 1 to March 31 doesn’t work, you can do the same thing. It says, enter the annual salary or hourly wages as of February 15th through April 26, 2020, and see if that happens. And it allows you to kind of go through a couple of different ways of calculating this. If the average number of workers has been lowered than you do have, you have an issue. Right? Then it’s going to wind up reducing your costs. You want to multiply the amount entered in those sections by .75 to see if it’s positive or negative, and that’s going to be about wind up being what you subtract from your form.

I know this is hard on podcast guys. You want to check out the video so that you’re looking at it with us together. The bottom line is that to recap, there are your payroll expenses, which is your gross pay. Your employer taxes on State and Local taxes, your employer contributions to health insurance, your employer contributions to retirement, plus your mortgage interest rent, lease, or utility payments that gives you $1 figure that’s been adjusted up or down, or I’m sorry, adjusted down only for full-time equivalency reductions and salary hourly wage reductions. So if your average salary is lower, your average hours are lower then it will lower down. Then there is when you put those together, you wind up calculating your potential forgiveness amount, and you get that forgiveness amount, which is what you will be done. Then on the next page, you certify quite a few items and these are important. You certify that the dollar amount for which forgiveness requested was used to pay the things that you say they were. You understand that if the funds were knowingly used for unauthorized purposes, the Federal Government would pursue recovery of loan amounts or criminal or civil fraud charges. The borrower has accurately verified the payments for the eligible payroll and non-payroll costs for which the borrower is requesting forgiveness that you submit to the lender the required documentation verifying those payroll costs. The existence of obligations and services that your utilities and those sorts of things, and eligible business mortgage interest payments, business rent or lease and business utility payments. So it’s saying, you’re going to put all those in the information provided this application is true and correct in all material respects, there’s a law that will punish you by up to five years in jail, fine up to a quarter-million dollars if you’re lying. The tax documents you’ve submitted are consistent with those the borrower has submitted and we’ll submit it to the IRS and that the SBA may request additional information, gonna give that a sign and send them that signature page along with the first page. And I’m sure your bank will want you to send it and that may or may not be required. 

So the supporting worksheets where you kind of figured out these sorts of things. Okay? So you have to do all of these so that you can get the full-time equivalency and figure out if you had a salary reduction and those sorts of things. When we look on here, Employee Name, Employee Identifier, Cash Comp, Average FTE, Salary Hour wage reduction. If you’re on our People Processes platform, we have a report you can use to print-off and supply this. So it should take care of what you need. But for those of you who are not on our platform, you want to download this form, start taking a look and start building out, you’re probably not at the end of your eight weeks yet, you probably want to take a look and build out a plan so that you’re collecting this data as you process your payrolls throughout the pay period, and make adjustments. If you don’t want to pay back the money, you may need to hire a few more people. If you’re going to pay back the money, though, that’s okay. They gave you more than they expected, then seems you needed. That’s okay. You can pay it back. That’s not the end of the world. I don’t want listeners and business owners to get into a position where they feel like if they don’t take advantage of every penny of this, they’re making a mistake. I think you should take advantage of what you need to keep your business running. But don’t go so far as to try and spend this money for no reason, you’ll cause more problems with your employees by overpaying them for no reason than you would by just behaving appropriately and doing your best. Worst case, you give them some of the money back in them. In the meantime, you got free money from heaven. And that’s awesome. So just take a deep breath.

I know a lot of people are caught up on how do I get every penny of this forgiven, and I want you to get as much of it as appropriate. But, if you got too much, that’s okay. You can pay some of it back, you can hang on to it and take it as a 1% interest loan for the next two years even and spend it on other stuff. You don’t even have to give it back if you don’t want to. You just have to pay it back after you spend it on marketing or something else like that, maybe getting everybody set up at home. These are the sort of things that you can spend this money on. I just hope that our listeners don’t get too caught up in trying to get every penny of this forgiven.

Ladies and Gentlemen, that’s it for today. Thank you so much for tuning in. Check us out on LinkedIn, Facebook, and Twitter at People Processes. Go to peopleprocesses.com, subscribe, and get some of our subscriber-only content. And if you got something out of this, make sure you share it with anyone you know. Thank you for tuning in. Now it’s time for you to go out there. Have a great day and get your work done.

Here’s the link for you to download the PPP Loan Forgiveness Application Form:

https://www.sba.gov/document/sba-form–paycheck-protection-program-loan-forgiveness-application

About the author, Rhamy

Rhamy grew up watching and working with his mother and grandmother in the senior insurance market. This familiarity with the struggles faced by people trying to navigate the incredibly complicated and heavily regulated healthcare market led him to start Poplar Financial while working on his degree at the University of Memphis. After completing his MBA and Bachelors in Finance and Economics, Rhamy guided Poplar Financial through the disruptive opportunity that is the Affordable Care Act. Since then Poplar Financial has received numerous awards from major insurance carriers and has completed its fourth year in a row of doubling in size. Now his team focuses on the processes around human resources and specializes in providing companies with between 20 and 1000 employees with the payroll, benefits, and HR needs.

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