PPP Loan Forgiveness Application EZ Form

The main highlights of the PPP Loan Forgiveness Application Form 3508EZ include:

• Borrowers will need to identify the number of employees at the time of the PPP Loan Application as well as the number of employees at the time the Borrower is applying for loan forgiveness.
• The Covered period is either:
  • The 24-week period beginning on the date PPP funds were received, not to extend past December 31, 2020.
  • If the Borrower received funds prior to June 5, 2020, the Borrower may elect to use the 8-week time frame beginning on the date PPP funds were received.
• The Alternative Payroll Covered Period is eligible for only payroll costs. The alternative period begins the first day of the first payroll cycle following the date of receiving PPP funding.
  • For example, if a Borrower received funding on April 20^th and the first day of the first pay period following April 20^th is April 26^th, that would be the beginning date of the Covered Period.
  • Similar to the points on the covered period, the Borrower can elect to use an 8‑week period if their loan was obtained prior to June 5, 2020. Otherwise, the 24‑week period should be used.
• If the Borrower is using an 8-week time frame, the maximum salary for each employee during either the Covered Period or Alternative Covered Payroll Period is $15,385. The maximum per employee for the 24-week time frame is $46,154.
  • Owners will not be reported separately; they are included in total payroll costs. The maximum salary to be used for owners under the 8-week time frame is $15,385 and $20,833 for the 24-week time frame.
• Employee benefits will be included in the total payroll costs on the 3508EZ.
  • Employer health insurance payments include self-insured plans and employer-sponsored group health plans. Health insurance payments made on behalf of self-employed individuals, general partners, or owner-employees of an S-Corporation are not eligible.
  • Employer contributions to employee retirement plans are eligible. Contributions made on behalf of a self-employed individual or general partners are not eligible.
  • Employer state and local taxes.
• If a Borrower reaches full forgiveness using only payroll costs, all other forgiveness categories can be left blank.
• Eligible non payroll expenses (business mortgage interest, business rent or lease payments, and business utilities) are payments that are paid or incurred within the Covered Period.
• Forgiveness is calculated using the smaller of:
  • The sum of payroll and non-payroll costs
  • PPP loan amount
  • Total payroll costs reported on the 3508EZ divided by .6

Documents to Maintain

Payroll

• Bank statements or third-party payroll service provider reports documenting cash paid to employees.
• Payroll tax forms such as Form 941 and state quarterly reports.
• Payment support such as receipts, cancelled checks or bank statements to support employer contributions towards health insurance and retirement plans
• If the Borrower is completing the EZ form because they qualify under requirement #2, the Borrower will need documentation for the average FTEs on payroll employed on January 1, 2020 and at the end of the Covered Period.

Non-payroll

• Business mortgage interest expenses need to be supported by lender amortization schedules, cancelled checks, or lender account statements from February 2020 and the months of the Covered Period through one month after the end of the Covered Period.
• Business rent of lease payments need to be supported by a current lease agreement, cancelled checks, or lessor account statements from February 2020 and the months of the Covered Period through one month after the end of the Covered Period.
• Business utility payments are supported by copies of invoices from February 2020 and those paid during the Covered Period.

If you need assistance or have any questions related to your PPP loan, you can reach us by phone at (203) 798-2721 (Bethel), (203) 366-5876 (Shelton), or (203) 359-1100 (Stamford), or email us at info@cironefriedberg.com.