What Are the Current Rules for Ppp Loan Forgiveness
To learn more about PPP audits, check out our 5-minute guide to what you need to know. At least 60% of your loan should be used for labor costs. Payments to independent contractors cannot be included in salary costs. Your rebate amount will be proportional to the amount you spend on payroll, up to the total loan amount. The SBA is launching a new direct remittance process that will provide PPP lenders with a voluntary technology solution that essentially allows their borrowers to apply for a loan forgiveness directly from the SBA through the new portal, which will be launched on August 4. In a 29-page Provisional Final Rule (IFR), the SBA introduced a COVID Revenue Reduction Score that can be used at the time of remittance to document the revenue reduction required for PPP loans in the second draw. The new IFR also establishes a direct borrower remittance process for lenders who choose to opt for an alternative method of processing loan forgiveness applications. This year`s PPP 2.0 loans have an expanded list of eligible expenses. Previously, remittance expenses were limited to payroll, rent, and utilities – now there`s more coverage and more context: Although many of the remittance rules released with the second wave of PPP (Paycheck Protection Program) loans are the same as in the first round, there are important differences that you should keep in mind when planning expenses and discounting for your first or second draw loan. Not sure if you should opt for the 8-week or 24-week covered period? The most important factors to consider are whether you are self-employed receiving the Homeowner`s Compensation Allowance and whether you have enough eligible expenses to spend the loan. Learn more about how a CPA breaks it down.
31 December 2020 is the last deadline for eligible expenditure. For loans paid on July 16 and later, this means you won`t be able to take full advantage of the 24 weeks. If your loan was over $150,000, you will need to prove how you spent your PPP loan. Only funds spent on eligible expenses are cancelled and at least 60% of your loan must be spent on salary costs to be eligible for a full rebate. In addition, the IFR extends the loan deferral period for PPP loans in cases where the borrower appeals in a timely manner against a final decision to review the SBA loan. For second-run loans of less than $150,000, you will need to file documents that show a decrease in annual gross revenue of at least 25%, or for a quarter of 2020 compared to the same quarter of 2019. For example, if you worked in an office in 2019 and didn`t have a home office, you wouldn`t have been able to claim a deduction from your mortgage interest. Even if you are currently working from home, you are not eligible to charge mortgage interest payments for the rebate. You apply for a credit remittance through your PPP lender – not through the SBA. Your lender will confirm your records and let you know which part of your loan is eligible for forgiveness. Then, the SBA will review your loan and remittance application before transferring money to your lender. In addition, the SBA said it has heard concerns from PPP lenders of all sizes that requiring borrowers to submit and lenders to review revenue reduction documents at the time of remittance delays the remittance process for PPP loans in the second draw by $150,000 or less.
Borrowers who have received a targeted EIDL advance or an additional targeted advance do not need to repay a portion of their loan (up to a maximum of $15,000). These advances are treated as grants, so no pardon application is required. There is no official deadline prescribed by the government. However, if you don`t apply for a rebate within 10 months of the end of your covered period, you`ll need to start paying the loan. Originally, PPP loans had to be used within 8 weeks to qualify for a credit forgiveness. Now the period covered has been extended to 8 to 24 weeks. Some nuances to note: Costs incurred before the period covered but paid during the period covered are eligible for forgiveness. As well as the costs incurred during the period covered but paid after its end, provided that they are paid no later than the next regular billing or invoicing date. To receive the pardon, you must complete a pardon application form and submit it to your lender. Here`s our step-by-step guide to completing your PPP loan forgiveness application form.
Business expenses for electricity, gas, water, transportation, telephone or Internet access are eligible uses of PPP funds and qualify for the rebate. Yes, as long as you pay it on the next regular billing date, all eligible non-salary costs (utilities, rent, mortgage interest) can be claimed for forgiveness, prorated until the end of the period covered. The SBA said the new remittance process will provide lenders with reduced costs, increased efficiency and faster remittance payments from the SBA, while borrowers will benefit from the ability to submit loan remittance applications directly through the platform and reduce the wait and uncertainty associated with bidding by their lender. .