How Business Owners Can Fill Out The PPP 3508 and EZ LOAN FORM For Loan Forgiveness
Headed toward the end of the year; usually, that means we prepare to start Tax Planning and closing out the 3rd Quarter, planning the office holiday parties and our winter vacations, preparing for everyone to start using their furnaces again or the pipes freezing or deep cleaning for holiday parties. But this year is different, and it has been different for most of the year. What we are preparing for this September is Loan forgiveness. 70% of our clients received the PPP loan after working with us to get the necessary documentation and help to fill out the paperwork. That also means that we have to help prepare the documentation to acquire forgiveness on those loans. We have previously talked about what you can use the funds on, so I am not going to dig deep into that, but we are going to prepare to get the loans forgiven.
Now, first and foremost, this is not something to rush into to get it done. You have until December 31st, 2021, to file for forgiveness on the loan, so it is best to make sure you are ready to apply for the forgiveness. Forgiveness will be applied to your lender. Not all lenders are currently accepting forgiveness applications, so far, I have only heard of two, but that could always change. Once you apply, you will have to have a response back within 60 days as to how much will be forgiven as there are many variables. To get the best results, make sure you have all the following documents available:
- Payroll Reports from your payroll provider detailing net pay along with all deductions or garnishments.
- Payroll tax filings (941) or state filings for taxes or unemployment taxes
- Documentation showing all contributions to retirement or health insurance if you used PPP funds for this.
- Documents and payment receipts for rent payment, mortgage payments, or utility payments if you used funds to pay for this (remember these all needed to be active before February 15th, 2020)
Once you have all this documentation, you can fill out the PPP forgiveness application. At this time, there are two versions of the form, the “long-form” as most people call it, or the EZ form, which you have to meet specific requirements, which you can see below.
- You are a self-employed individual with no employees and didn’t claim any employees in your application for the PPP in the first place (this is generally not the clients that we deal with in the home services industry)
- You can certify that you didn’t reduce salaries by more than 25% and maintained the same number of employees during your forgiveness period as you did in the 1st Quarter of 2020. If you did the due process to hire employees and couldn’t or an employee refused to work full time, you can still claim this.
- You can certify that you didn’t reduce salaries by more than 25% and that you were legally unable to operate your business at normal levels due to regulations.
If you apply for one of those, then you can use the EZ form, which removes two pages that deal with calculating your forgiveness or the schedule A section. Most companies that I am working with can claim this form, but keep in mind that if you falsely claim that you meet these requirements and are later audited, you risk a chance of imprisonment. Hence, please discuss this with someone and be 100% certain to take as much risk away as possible.
There is another rumored form called the Super EZ, which was in the process of being reviewed and approved before the summer recess of congress, which will supposedly remove another page that needs to be filled out. As such, we advise most clients to hold off for now as you have an entire year for forgiveness so that we can try and use the most straightforward form possible. Now, if you know that you do not qualify for the EZ form and your bank is currently accepting forgiveness applications, begin the process. Current rumors are stating that if you used the funds for anything other than payroll, you will not be able to use the Super EZ form even if it is for the approved use of funds.
You will see that we have two videos that walk you through the forgiveness applications for both current forms that I encourage you to watch for an explanation of the fields. If you have any questions, don’t hesitate to book a call with us. One major thing that will make this process easier is keeping the proper records of how you spent the money through your bookkeeping. This can be done by either having a separate bank account or using class tracking or tagging depending on your system to make it as simple as possible if you are audited to prove the expenses. If you need guidance with this or have some questions, don’t hesitate to schedule a call.
Detailed Guided Videos For PPP 3508, PPP 3508EZ Paycheck Protection Program, Forgiveness Application, Long-Form, EZ Form, Super EZ, for Tax Planning preparation:
Long-Form PPP Loan Forgiveness Calculation Form:
PPP 3508EZ Paycheck Protection Program: