How To Apply For The Ppp Loan

How To Calculate A Ppp Loan If Youre Self

• Retrieve your Schedule C from either 2019 or 2020. If youre using 2020 to calculate your payroll costs and have not yet filed your 2020 return, you can fill out your 2020 Schedule C and calculate the value.
• Choose the number youll use to calculate payroll. This will either be gross income or net profit . If the amount is greater than $100,000/year, reduce to $100,000/year. If neither number is greater than $0, you do not qualify for a PPP loan.
• Take that number and divide by 12 to calculate your monthly payroll costs.
• Multiply the monthly total by 2.5.

More Than 5 Million Businesses Have Received Covid Relief Funds It’s Important To Keep Loan Forgiveness In Mind From The Moment You Receive Your Funds To Avoid Unforeseen Costs

The COVID-19 pandemic left millions of businesses struggling to stay afloat. Between lockdowns, quarantine, and uncertainty over the future, small business owners found themselves stuck between a rock and a hard place. Unfortunately, some were forced to make the difficult decision to close down operations, and many of those had to do so permanently. Luckily for other businesses, aid came in the form of disaster relief funds.

Now that over 5 million businesses have received COVID relief funds, another important question arises for small business owners: How can they ensure the loans are forgivable? Its important to keep loan forgiveness in mind from the moment you receive your funds. Otherwise, you could find yourself blindsided later if you dont meet the eligibility requirements for forgiveness.

Here are the key takeaways for small business owners:

• Economic Injury Disaster Loan and the Paycheck Protection Program Loan loans are eligible for some degree of loan forgiveness.

• The EIDL advance grant is forgivable, up to $10,000.

• EIDL advance grant forgiveness is automatic.

• PPP loans up to $10 million can be forgiven.

• PPP loan forgiveness requires submission of an application to the lending institution.

Are There Exceptions To Fte Reductions

Yes, there are several situations where a reduction in FTE would not be counted against you. These include:

• Any positions for which you made a good-faith, written offer to rehire an individual who was an employee on February 15, 2020 but were unable to hire similarly qualified employees for unfilled positions on or before one of the following:
• For loans made before December 27, 2020,December 31, 2020.
• For loans made after December 27, 2020, the last day of the covered period.

You should refer to the SBA Form 3508 instructions for details about FTE reduction exceptions.

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Changes In Ppp Loan Round Since Its Launch

The rules around both PPP eligibility and loan forgiveness have changed repeatedly since the launch of the PPP in March 2020, with the SBA and Treasury making multiple corrections through the end of the application period last summer.

The PPP program originally was intended to cover expenses within an eight-week window, but the government eventually expanded it to up to 24 weeks of expenses. Funds also were originally only eligible for forgiveness if at least 75% of the amount granted was used for payroll, but thats since been lowered to 60%.

Today, borrowers can choose their loans covered period for loan forgiveness purposes to be any length between eight and 24 weeks. Additional expenses like operations, property damage, supplier costs, and worker protection are now eligible for full or partial loan forgiveness.

Also, the rules surrounding tax deductibility have been clarified. Businesses can claim a deduction on qualifying expenses paid for with PPP funds.

If You Are A Partner In A Partnership

The SBA has previously clarified that while partnerships are eligible for PPP loans, a partner in a partnership may not submit a separate PPP loan application for themselves as a self employed individual. The following methodology should be used to calculate the maximum amount that partnerships can borrow:

Step 1: Compute 2019 payroll costs by adding the following:

2019 Schedule K-1 Net earnings from self-employment of individual U.S.-based general partners that are subject to self-employment tax, multiplied by 0.9235,5 up to $100,000 per partner:

• Compute the net earnings from self-employment of individual U.S.-based general partner that are subject to self-employment tax from box 14a of IRS Form 1065 Schedule K-1 and subtract any section 179 expense deduction claimed in box 12 any unreimbursed partnership expenses claimed and any depletion claimed on oil and gas properties
• if this amount is over $100,000, reduce it to $100,000
• if this amount is less than zero, set this amount at zero

2019 gross wages and tips paid to employees whose principal place of residence is in the United States , up to $100,000 per employee, which can be computed using:

Step 2: Calculate the average monthly payroll costs .

Step 3: Multiply the average monthly payroll costs from Step 2 by 2.5.

How to Substantiate Your Income

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Calculating Payroll Costs And Your Loan Amount

Now, its time to calculate your payroll costs. The maximum amount you can borrow from PPP is based on your average monthly payroll costs for 2019 or 2020 . If your business is newer and you dont have 12 months worth of payroll costs, you can calculate your payroll costs up to February 15, 2020.

Payroll costs include:

Once you know your payroll costs, multiple that number by 2.5 and add any amount you have received in EIDL funds .

Enter your employee number.

Select all the ways in which you plan to use the loan proceeds.

Finances and Taxes

Is There A Cap On Annual Salary When Considering Payroll Costs

For each individual employee, the total amount of cash compensation eligible for forgiveness may not exceed a gross annual salary of $100,000, as prorated for the covered period. For an 8-week covered period, thatâs a maximum of $15,385 per employee $46,154 per employee for borrowers using a 24-week covered period. Note: the cap does not include eligible non-cash benefits.

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Required Documents For Paycheck Protection Program Loan Application

The SBA is no longer accepting applications for PPP loans. If you received a PPP loan through Kabbage, for updates on loan forgiveness.

The Paycheck Protection Program provides nearly $350 billion for small business cash-flow assistance through federally guaranteed loans. The loans can cover payroll support, employee salaries, rent, utilities and other debt obligations as Americas small businesses recover from the economic impacts of COVID-19.

Loans from the Paycheck Protection Program will be available for amounts equaling 2.5 times the average monthly payroll for a business, up to $10 million. Through Kabbage, small businesses can apply for PPP loans of up to $2 million. The funds are eligible for 100% forgiveness if your business follows the PPPs forgiveness requirements issued by the Small Business Administration. To determine your businesss eligibility for one of these loans, well need to look at your payroll costs in addition to other information about your business.

Before you start the application, here is a list of documentation you may need on hand.

If Your Business Is An Llc

How to calculate your loan amount will depend on how your LLC files its taxes. The SBA states that LLCs should follow the instructions that apply to their tax filing status in the reference period used to calculate payroll costs i.e., whether the LLC filed as a sole proprietor, a partnership, or a corporation in the reference period.

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What Supporting Documentation Is Needed For My Application For Forgiveness

The type of documentation required may vary depending on the nature of the expense for which you are seeking forgiveness. Ourâ¯PPP Forgiveness Documentation reference guides can help in preparation.

All supporting documentation is required to submit the forgiveness application. You may need to wait for statements to be issued in order to submit your application.

Ppp Loan Specific Information

Next, the application asks for some information about your business. For starters, how many employees do you have and what is your average monthly payroll?

The application is going to ask you to multiply your average monthly payroll by 2.5. The result of this simple calculation is your loan amount request.

You will also see a reference to adding EIDL to your average monthly payroll. This applies to businesses that have an outstanding balance from an Economic Injury Disaster Loan.

Finally, this section is going to ask for the purpose of your loan. This is verification that you are using the loan for payroll, mortgage/rent interest, or utilities.

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How Much Money Can You Get

You can qualify for 2.5 times your monthly payroll costs based on either your net profit or gross income during the calculation period.

In March 2021, the SBA released new guidance allowing the self-employed to choose whether they want to calculate their PPP loans based on net profit or gross income. Previously, calculations were limited to net profit, which limited the funds you could access if youre in the habit of maximizing tax deductions.

If you have additional employees on your payroll, their payroll can be used to calculate payroll numbers. You cannot include 1099 workers in your payroll calculations, as they are entitled to apply for their own PPP loans.

Determine If You Are Eligible For Loan Forgiveness

To get your PPP loan forgiven, you must meet specific requirements. The size of the loan will determine how much proof you need to provide. The eligibility requirements are as follows:

• At least 60% of the loan total was used to cover payroll costs and expenses.
• The remainder of the loan was spent on mortgage interest or rent, utility expenses, operating costs, property damage caused by the pandemic, supplies, and personal protective equipment .
• Employers attempted to maintain employment levels and pay that were in line with levels prior to the pandemic.

If you check off these boxes, you can move on to the next step.

FYI: In the first iteration of the PPP loan program, all Economic Injury Disaster Loans small business owners received were deducted from the amount of PPP loan that could be forgiven. That is no longer the case. This means that even if you received other aid from the SBA, you can still get your PPP loan fully forgiven.

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Application Form 2483 Explained

If you are not applying with a Schedule C, apply with form 2483. Weâll go through the application form box by box. We recommend you follow along by downloading a PPP loan application here. Check in with your lender before filling in the application. Some lenders will require you to submit your information through their online portal as opposed to submitting a paper application.

What Is The January/february Period Ive Heard Referenced

The CARES Act became law March 27, 2020 and in the first round of PPP, self employed business owners did not get instructions on how to calculate payroll right away. When the guidance did come out, it did not include instructions for businesses that werent in business in 2019 but were in business by the deadline of February 15, 2020 required to qualify.

Later the SBA provided instructions for businesses that were not in business in 2019 but were in business in January and February 2020. Those instructions generally allowed those businesses to calculate their loan amount using their average monthly payroll costs incurred in January and February 2020. This calculation is still an option, or the business may use all of 2019 or all of 2020 to qualify. For details on how to calculate the January/February option, see the SBA guidance dated January 17, 2021: Questions 10 & 11.

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Paycheck Protection Program Loan Forgiveness

Eligible clients can apply now for PPP loan forgivenessOur PPP loan forgiveness portal is now open and includes a simplified forgiveness application for PPP loans of $150,000 or less. We will email clients with a link to access our loan forgiveness application over the coming weeks, when the application becomes available to them.

When can I apply for PPP loan forgiveness?

The simplified SBA Form 3508S is now available, in addition to the revised SBA Form 3508EZ and SBA Form 3508 applications. Eligible clients will receive an email with a link to access our loan forgiveness application when it becomes available to them.

As a reminder, based on the latest updates from the SBA, you now have more time to gather your documents and prepare your application. The timeframe for applying for loan forgiveness in the promissory note no longer applies.

For additional assistance with PPP loan forgiveness documentation, view our documentation guide.

Is Bank of America participating in the SBA Direct Forgiveness program for applications equal to or less than $150,000?

The Small Business Administration announced on July 28, 2021 a new initiative that will allow borrowers of participating lenders with loans less than or equal to $150,000 to apply for forgiveness through the SBAs direct forgiveness online portal.

Do I need an Online Banking ID to access my PPP loan forgiveness application online?

Yes, you need a profile set up for Business Advantage 360, our small business online banking.

Add New Business Information Requirements

These new mandatory fields must be filled out on the same Business Information page of the application.

• The date on your Secretary of State filing must be the same as the date on your business start date.
• Start typing your industry, then choose it from the drop-down menus that appear. If your industry isnt listed, choose the one that comes closest. Without an industry, the SBA cannot approve an application.

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When Is The Latest I Can Apply For Forgiveness

If you have a Second Draw loan, you must submit your forgiveness application for your First Draw loan either before or simultaneously with your Second Draw loan forgiveness application.

The latest date you can apply for loan forgiveness is the maturity date of the loan. If you have not submitted a complete loan forgiveness application within 10 months after the end of the maximum 24-week covered period, payments will be due.

If you complete your application after you start making payments and receive a forgiveness determination that exceeds your outstanding principal balance, a settlement process will occur for any overpayment.

What Are The Benefits Of Paycheck Protection Program Loans

PPP loans are designed to assist small businesses in keeping their payrolls up to date and continuing to make important payroll-related payments such as rent and utilities. We can use the loan for the following purposes in its entirety:

• Payroll expenses:
• Group vision, dental, disability, or life insurance
• Payment of state or local taxes assessed on the compensation of employees

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Who Is Eligible For A Second Draw Ppp Loan

There is a criterion to qualify for a second draw PPP loan. If you or your business received an initial PPP loan, you may qualify for the second round of funding, provided you meet the following requirements:

• You are eligible for a second draw PPP loan if you have less than 300 employees.
• If you have used or will use the full amount of your first PPP loan.
• If you have experienced a drop of at least 25% in annual gross receipts or for any quarter of 2020, compared with the same quarter in 2019.
• Have not permanently closed. Businesses that have temporarily closed or suspended operations can receive a second-draw loan.

Second-draw PPP loans are available to businesses such as:

• Selected nonprofit organizations
• Businesses that receive a Save Our Stages grant cannot receive additional PPP loans.

Second Draw PPP Loan Ineligible for:

• Those entities are excluded from eligibility under the CARES Act or Consolidated First Draw PPP IFR.
• A business concern or entity primarily engaged in political activities or lobbying activities, as defined in section 3 of the Lobbying Disclosure Act of 1995 , including any entity that is organized for research or for engaging in advocacy in areas such as public policy or political strategy or otherwise describes itself as a think tank in any public documents

lobbying activities.

lobbying expenditures related to a state or local election or

• Any business concern or entity:

Step : Confirm Ownership

Confirm whether someone holds a 20% or higher ownership in the company on the first Owner Information page.

If this is the case, please input the percentage of ownership that you own, as well as any additional owners with a 20% ownership stake, using the link near the bottom of the page.

Please show and confirm that you are allowed to fill out the PPP application on behalf of the business you are applying for if no one has 20% ownership of the company.

The percentage of ownership must be larger than zero.

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