The Paycheck Protection Loan is part of the CoronaTax new loans available to small businesses. The first round went quickly because the idea of a loan that turned into a grant seemed to be good to be true. We now have a second round of money available and the requests have slowed.
The biggest concern by would-be borrowers is not understanding the rules. What does it take to get your loan forgiven? Is it even possible if you can’t get your former employees back to work?
In today’s blog, we’re going to look at the paperwork requirements for the new Form 3805, which is used when you apply for forgiveness after the 8-week period following receipt of the PPP money.
You need to have 75% or more of the expenditures for qualified payroll expenditures. There is a new limit for owner/employees and possibly their family members. Other employees can receive overtime pay, bonuses and raises.
Paperwork requirement: Copy of 2019 tax return, copies of current Form 941 (payroll tax return), copies of checks or payments made to the owner, owner family and employees
The remaining amount, less than 25% of the expenses, can be spent for rent, interest and/or utilities.
For rent: Provide a copy of the rental agreement that is dated before February 2020. Show proof of the payments that were made.
For interest: Provide a copy of the contract or breakdown of principal and interest for the loans. If you have a contract (such as a mortgage) provide that. And, of course, show proof that the payment was made during the time period.
For utilities: Provide copies of the contracts (which be most applicable for Internet and cell phone plans), current invoices and proof of the payments made.
Remember that the payments have to cover the 8-week period only. If you’re catching up a past due amount, that amount is not allowed as part of the expenses that are part of loan forgiveness.
We’re seeing changes right now to CoronaTax. I’m already working on the Second Edition. When you purchase the First Edition of CoronaTax NOW and register your book, you’ll receive a discount coupon that will give you 75% off future editions of CoronaTax (digital version). This will be available for the second edition, third edition and so forth. I can keep this up as long as Congress can!