Tips for PPP Loan forgiveness

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%.

Documentation
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

Additional Loan Forgiveness Facts