PPP Loan Borrowers will need Assistance when Applying for Forgiveness of their PPP Loans

Foodman CPAs & Advisors
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On 4/15/20, the SBA and the U.S. Department of the Treasury released an application form for Paycheck Protection Program (PPP) loan forgiveness along with instructions for completing the form. To apply for forgiveness of a Paycheck Protection Program (PPP) loan, the Borrower must complete the application and submit it to its Lender (or the Lender servicing the Borrower’s loan).  The Borrower may also complete this application electronically through its Lender. The Loan Forgiveness Application has an Expiration Date of 10/31/2020. 

This application has the following components:

  1. the PPP Loan Forgiveness Calculation Form
  2. PPP Schedule A
  3. the PPP Schedule A Worksheet
  4. the (optional) PPP Borrower Demographic Information Form

All Borrowers must submit (1) and (2) to their Lender. 

Representations and Certifications on Behalf of the Borrower for which Forgiveness is Requested

PPP Borrowers must certify to ALL the following:

  • The dollar amount for which forgiveness is requested was used to pay costs that are eligible for forgiveness (payroll costs to retain employees; business mortgage interest payments; business rent or lease payments; or business utility payments).
  • The dollar amount for which forgiveness is requested includes all applicable reductions due to decreases in the number of full-time equivalent employees and salary/hourly wage reductions.
  • The dollar amount for which forgiveness is requested does not include nonpayroll costs in excess of 25% of the amount requested; and does not exceed eight weeks’ worth of 2019 compensation for any owner-employee or self-employed individual/general partner, capped at $15,385 per individual.
  • An understanding that if the funds were knowingly used for unauthorized purposes, the federal government may pursue recovery of loan amounts and/or civil or criminal fraud charges.
  • An accurate verification of the payments for the eligible payroll and nonpayroll costs for which the Borrower is requesting forgiveness.
  • That they have submitted to the Lender the required documentation verifying payroll costs, the existence of obligations and service (as applicable) prior to February 15, 2020, and eligible business mortgage interest payments, business rent or lease payments, and business utility payments.
  • That the information provided in the application and the information provided in all supporting documents and forms is true and correct in all material respects.
  • An understanding  that knowingly making a false statement to obtain forgiveness of an SBA-guaranteed loan is punishable under the law, including 18 USC 1001 and 3571 by imprisonment of not more than five years and/or a fine of up to $250,000; under 15 USC 645 by imprisonment of not more than two years and/or a fine of not more than $5,000; and, if submitted to a Federally insured institution, under 18 USC 1014 by imprisonment of not more than thirty years and/or a fine of not more than $1,000,000.
  • That the tax documents submitted to the Lender are consistent with those the Borrower has submitted/will submit to the IRS and/or state tax or workforce agency.
  • An understanding, acknowledgement, and agreement that the Lender can share the tax information with SBA’s authorized representatives, including authorized representatives of the SBA Office of Inspector General, for the purpose of ensuring compliance with PPP requirements and all SBA reviews.
  • An understanding, acknowledgement, and agreement that SBA may request additional information for the purposes of evaluating the Borrower’s eligibility for the PPP loan and for loan forgiveness, and that the Borrower’s failure to provide information requested by SBA may result in a determination that the Borrower was ineligible for the PPP loan or a denial of the Borrower’s loan forgiveness application.

When signing the application, the Borrower is making Representations and Certifications

The Borrower’s eligibility for loan forgiveness will be evaluated according with PPP regulations and guidance issued by SBA through the date of the application. SBA may direct a lender to disapprove the Borrower’s loan forgiveness application if the SBA determines that the Borrower was ineligible for a PPP loan.

Consult your Tax Expert.

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