Not having to pay back the Paycheck Protection Program loan is a great benefit to small businesses. But for the loan to be forgiven, business owners need to follow the rules carefully.
Loan Forgiveness Applications
There are two loan forgiveness applications: 3508 application and the new 3508EZ form. To qualify for the EZ form, you need to meet one or more of the following criteria:
- Self-employed or don’t have any employees.
- You didn’t reduce your employee hours or salaries by more than 25%.
- You experienced a reduction in business-related COVID-19 and did not reduce employee wages by more than 25%.
Whether you qualify to submit an EZ application or not, you need to document your use of the loan. Here’s a list of documents you’ll need.
Forgivable Loan Use List
Here’s a list of all items businesses could use the loan for and will be considered forgivable:
- You must spend at least 75% of the forgivable amount of your PPP loan on payroll costs.
- Utilities: Electricity, gas, water, telephone and internet use.
- Transportation (waste removal)
- Payroll costs for U.S.-resident employees, consist of
- Salary, wage, commission or similar compensation up to $100,000 per employee.
- Cash tips or equivalent
- Payment for vacation, parental, family, medical