The US Department of Treasury and the Small
Business Administration have reauthorized the Paycheck
Protection Program (PPP) and PPP applications are now open for eligible
first- and second-time borrowers.
First Draw Loans
First draw PPP applicants should submit to any participating
lender on SBA Form 2483 – available here (https://home.treasury.gov/system/files/136/PPP-Borrower-Application-Form.pdf).
These loans continue to use the original formulas under the CARES Act
to determine the loan size, i.e., 2.5 times the average monthly payroll
costs up to $10 million per borrower with an overall limit of $20
million when including loans to members of the same corporate group.
Second Draw Loans
Second draw applicants should submit to its participating lender on SBA
Form 2483-SD – available here (https://home.treasury.gov/system/files/136/PPP-Second-Draw-Borrower-Application-Form.pdf).
Second draw loans use the same 2.5 times average monthly payroll costs
for most borrowers, but restaurants, hotels and other establishments
that provide lodging and/or food for immediate consumption (NAICS code
72 entities) are allowed a factor of 3.5 times the average monthly
payroll costs. All second draw PPP loans are capped at a maximum of $2
million per borrower (per location for NAICS code 72, 511110 or 5151) up
to an overall limit of $4 million when including loans to members of the
same corporate group.
Finding a Lender
Applicants may use the SBA Lender Match Portal to find participating PPP
lenders – available here (https://www.sba.gov/funding-programs/loans/lender-match).
If you need additional assistance finding a participating PPP lender,
Boos & Associates can help you with that.
HOW TO APPLY FOR PPP LOAN FORGIVENESS
Form 3508S - Simplified Rules for $150,000 or Less:
The SBA has updated the simplified PPP loan Forgiveness Application Form
3508S to include loans of $150,000 or less – available here (PPP Loan
Forgiveness Form 3508S (sba.gov)).
You (the Borrower) can apply for forgiveness of your First or Second
Draw PPP Loan using this SBA Form 3508S only if the loan amount you
received from your Lender was $150,000 or less for an individual First
or Second Draw PPP Loan. If you are not eligible to use this form, you
must apply for forgiveness of your PPP loan using SBA Form 3508 or
3508EZ (or lender’s equivalent form). Each PPP loan must use a separate
loan forgiveness application form. You cannot use one form to apply for
forgiveness of both a First and Second Draw PPP loan.
SBA Form 3508S requires fewer calculations and less documentation for
eligible borrowers. SBA Form 3508S does not require borrowers to show
the calculations used to determine their loan forgiveness amount.
However, the SBA may request information and documents to review those
calculations as part of its loan review or audit processes. Complete
this SBA Form 3508S in accordance with the instructions below, and
submit it to your Lender (or the Lender that is servicing your loan).
Borrowers may also complete this application electronically through
their Lender.
It is estimated that approximately 75% of PPP loans should qualify for
this simplified forgiveness process.
FORM 3508EZ:
If you do not qualify for 3508S, you will want to use the 3508EZ form –
available here (https://www.sba.gov/sites/default/files/2020-06/PPP%20Forgiveness%20Application%203508EZ%20%28%20Revised%2006.16.2020%29%20Fillable-508.pdf),
but to do so you must be able to answer affirmative to one of the
following three questions:
1. The Borrower is a self-employed individual, independent contractor,
or sole proprietor who had no employees at the time of the PPP loan
application and did not include any employee salaries in the computation
of average monthly payroll in the Borrower Application Form (SBA Form
2483).
2. The Borrower did not reduce annual salary or hourly wages of any
employee by more than 25 percent during the Covered Period or the
Alternative Payroll Covered Period (as defined below) compared to the
period between January 1, 2020 and March 31, 2020 (for purposes of this
statement, “employees” means only those employees that did not receive,
during any single period during 2019, wages or salary at an annualized
rate of pay in an amount more than $100,000);
AND
The Borrower did not reduce the number of employees or the average
paid hours of employees between January 1, 2020 and the end of the
Covered Period (ignore reductions: 1) that arose from an inability to
rehire individuals who were employees on February 15, 2020 if the
Borrower was unable to hire similarly qualified employees for unfilled
positions on or before December 31, 2020, and 2) in an employee’s hours
that the Borrower offered to restore and the employee refused). See 85
FR 33004, 33007 (June 1, 2020) for more details.
3. The Borrower did not reduce annual salary or hourly wages of any
employee by more than 25 percent during the Covered Period or the
Alternative Payroll Covered Period (as defined below) compared to the
period between January 1, 2020 and March 31, 2020 (for purposes of this
statement, “employees” means only those employees that did not receive,
during any single period during 2019, wages or salary at an annualized
rate of pay in an amount more than $100,000);
AND
The Borrower was unable to operate during the Covered Period at the
same level of business activity as before February 15, 2020, due to
compliance with requirements established or guidance issued between
March 1, 2020 and December 31, 2020 by the Secretary of Health and Human
Services, the Director of the Centers for Disease Control and
Prevention, or the Occupational Safety and Health Administration,
related to the maintenance of standards of sanitation, social
distancing, or any other work or customer safety requirement related to
COVID-19.
Form 3508:
If you do not qualify for either Form 3508S or Form 3508EZ, you will
need to fill out the standard 3508 form – available here (https://www.sba.gov/sites/default/files/2020-06/PPP%20Loan%20Forgiveness%20Application%20%28Revised%206.16.2020%29-fillable_0-508.pdf).
Need Help?
If you are interested in obtaining a Payroll Protection Program first or
second draw loan, or are in need of additional guidance related to your
forgiveness application, Boos & Associates is happy to assist
– please email us at askboos@booscpa.com.
