The Paycheck Protection Program (PPP) was designed to provide “forgivable” loans to keep you in business and your workers on the payroll. There were several rounds of funding in 2020 including March 17 Coronavirus Aid, Relief, and Economic Securities
(CARES) Act, June 5 PPP Flexibility Act, and most recently Economic Aid Act on December 27 which allows you to apply for a first or second forgivable loan. So even if you already got a PPP loan, apply for a second loan if you qualify and need
the money! The deadline for applications is March 31, 2021.
Your PPP loan can be forgiven as long as you complied with the rules and used 60% of the money for payroll purposes, and the remainder on mortgage interest, rent, and utilities (within the covered period). Here is information to help you understand
how to apply and get your PPP loan forgiven.
All PPP loans are intended to be forgivable, meaning they do not have to be repaid. But you must comply with the Small Business Administration (SBA) rules in order for your loan to be forgiven. Also forgiveness is not automatic.
You must apply for forgiveness with the bank or lending institution where you got your PPP loan. Forgiveness is dependent on compliance with the rules, but the rules are different depending on when you got your loan (on or before June 5, 2020
– CARES Act; or after June 5 – PPP Flexibility Act). New rules are expected for 2021 loans.
The key to getting your PPP loan forgiven is to understand which SBA application to use and then to apply for forgiveness with the bank where you got your PPP loan. You will be applying electronically through your bank’s PPP loan portal. All of
the information on the SBA forms will have been loaded onto your bank’s website. So familiarization with the SBA forms will make it easier for you to understand the information that your bank needs. Simply put, your bank will need the same
information as the SBA forms. Here is some information to help you determine which form to use.
Form 3508S
PPP Loan Forgiveness Application Form 3508S is only one page. You are allowed to use this form if your loan amount is $50,000 or less. There are no calculations to perform. You must read and agree to 7 certifications. If you agree, you electronically
initial each one and then electronically sign it (online with your bank). NOTE: The Economic Aid Act of December 27, 2020 increased the allowable maximum from $50,000 to $150,000. It is anticipated that SBA will either
revise this form or replace it to reflect the higher amount.
Form 3508EZ
PPP Loan Forgiveness Application Form 3508EZ is a shortform application for PPP Loan Forgiveness. To be eligible to use Form 3508EZ, you must meet one of the following criteria:
- You are self-employed and have no employees; OR
- You did not reduce the salaries or wages of your employees by more than 25%, AND did not reduce the number or hours of your employees; OR
- You experienced reductions in business activity as a result of health directives related to COVID-19, AND did not reduce the salaries or wages of your employees by more than 25%.
Form 3508EZ is only slightly more complex than 3508S. It is a two-page application with some very simple calculations at the bottom of page 1. The certifications are similar to 3508S, and you will have to certify one of the above bullet items.
FORM 3508
PPP Loan Forgiveness Application Form 3508 is the longform application for PPP Loan Forgiveness. This is the form that is required if you do not qualify to use form 3508S or 3508EZ.
Your bank will have a questionnaire once you logon, using your PPP loan username and password. The answers you provide will lead you to the right SBA form (3508S, 3508EZ, or 3508).
How Brooks Makes the Process Easy for You
To make it easier for you, we have loaded all 3 forms and the instructions for each on our COVID19 webpage. We have also developed PPP Loan Forgiveness webinars that explain how the SBA rules apply to a typical fire equipment distributor (FED). We have taken time to explain how the rules apply to you, including fulltime equivalents (FTEs), compensation,
safe harbors, and exceptions for certain circumstances.
Answers to Your Questions
Here are five essential questions and the answers that will help you with the PPP Loan Forgiveness process.
Q. Why do I need to know about SBA Forms 3508S, 3508EZ, and 3508, if I am applying electronically through my bank?
A. Your bank uses the information on those forms as the basis for electronic submittals. Familiarization
with the forms helps you make informed decisions and enables you to maximize your PPP Loan Forgiveness amount.
Q. How does my bank get me to the right form?
A. Once you are logged onto your bank’s webpage, you will answer a series of questions. Based on your answers, you will then be electronically completing form 3508S, 3508EZ,
or 3508.
Q. Does EIDL Advance get deducted from PPP loan forgiveness?
A. As of December 27, EIDL Advance is no longer deducted. If you already applied for forgiveness and EIDL Advance was deducted, your bank is required remit
that amount to you.
Q. An employee voluntarily resigned, refused an offer to be rehired, and I was not able to find a suitable replacement. Will I be penalized for that situation?
A. No, you will not need to take a reduction in your loan
forgiveness amount for that situation. You will also not need to take a reduction if an employee was fired for cause and no suitable replacement was found.
Q. What happens if part of my PPP Loan is not forgiven?
A. It remains a loan and must be repaid. Loans issued on or before June 5 have a maturity of 2 years. Loans issued after June 5 have a maturity of 5 years. PPP loans
have an interest rate of 1%. Payments are deferred 10 months after the end of the covered period (either 8 weeks or 24 weeks).
Q&As Developed by SBA
The SBA has also developed two question and answer (Q&A) documents. Although one is PPP Loans and the other is PPP Loan Forgiveness, both Q&A documents provide valuable information that will help you understand the intricacies of PPP Loan Forgiveness.
Both of these Q&As are now available to download from our COVID19 webpage. The Brooks COVID19 webpage is intended to be a one-stop-shop.
Remember, you will be applying for forgiveness through the bank where you received your PPP Loan and not directly with the SBA. You have probably received an email from your bank informing you that they have begun accepting PPP Loan Forgiveness
applications. But before you apply, check out the articles, video webinars, SBA forms, and other information on the Brooks COVID site www.brooksequipment.com/COVID19/. We
have developed and collected the resources that you will need to get forgiveness for your PPP Loan, provided you have complied with the SBA rules.
https://www.BrooksEquipment.com/Covid19/