PPP Loan Application: Accuracy, Organization Are Key

QUESTION: Our practice received payroll protection program (PPP) funds and now we need to fill out the PPP Loan Forgiveness Application. We are confused about what information we need for the forms. How do we determine whether we should follow the 8- or 24-week covered period? PPP Loan Application.
Question from White Plains, NY Subscriber

ANSWER: There’s good reason to be confused with the PPP Loan Forgiveness Application — it’s complicated and unorganized and doesn’t follow a logical sequential format. The Small Business Administration (SBA) and banks have not provided much guidance on how to complete the application. But if you make just one error you might need to repay your loan with high interest, or worse — be fined for fraud!

Fulfill PPP Loan Application Components

The PPP Loan Forgiveness Application (SBA Form 3508) is a complicated multi-page form. The five-page document includes:

PPP Loan Forgiveness Calculation Form
PPP Schedule A
Schedule A Worksheet
PPP Borrower Demographic Information Form

What’s required: You need to fill out and submit the Forgiveness Calculation Form and the PPP Schedule A to your lender. The Schedule A Worksheet is for your calculations and you should keep it for your records but you don’t need to submit it. The demographic information page is optional.

Gather Your Documentation

Before you sit down to fill out the PPP Loan Forgiveness Application, you will need to gather a lot of information and documentation. While the below is not an exhaustive list, make sure you have these necessary pieces of information, including:

Your practice’s full legal name, phone number, and an email address
Employer Identification Number (EIN) or Social Security Number (SSN)
Both your lender’s and your PPP loan numbers
Employee count when you applied for the PPP loan and now (when applying for loan forgiveness)
Salary and wage totals for each employee on payroll
The date of your PPP loan disbursement
Economic Injury Disaster Loan (EIDL) advance amount and application number (if applicable)
Total costs for payroll, mortgage interest, rent or lease, and utilities
Your payroll frequency

Calculate Your Covered Period

One of the items on the application that you’ll need to calculate and list dates for is your loan forgiveness period, listed on the application as “covered period” and “alternate covered period.” This is essentially the time frame that you used funds for payroll.

Some background: In order to qualify for full forgiveness, you have to utilize all of your PPP funds to pay eligible expenses within a certain time frame. Initially this was 8 weeks, but that proved tricky for companies who weren’t on a weekly payroll schedule, so an alternative 8-week schedule was established. The recent Paycheck Protection Program Flexibility Act brought about some changes to PPP loans, including extending the loan forgiveness period to 24 weeks.
Not sure which loan forgiveness period you qualify for or should choose? Here’s the breakdown: PPP Loan Application.

24-week period: If you received your loan after June 5, 2020, you will have 24 weeks from the day you get your loan or until December 31, 2000, whichever time frame is shorter. If you received your loan prior to June 5, 2020, you can opt to use the 24- or an 8-week period.
Standard 8-week period: Begins on the day you receive your loan.
Alternative payroll covered period: Begins on the first day of your first pay period following the day you receive your loan.

Factor Your Way to Forgiveness

The bulk of the PPP Loan Forgiveness Application has you calculating your payroll, mortgage/rent/lease, and utility payments to figure out your loan forgiveness amount. This is where you must calculate employee salary/hourly wage reduction, which is complicated, but you must get it right—even one mistake in this section can cost you funding. PPP Loan Application.

Bottom line: The PPP Loan Forgiveness Application is illogical because it’s not laid out in a sequential format. The good news is that accounting expert, Lin Walker can make it simple for you! In her online training session, “Keep More PPP Money with Proven Forgiveness Application Tactics,” she’ll show you how to avoid common application errors due to form instruction sequence and fill out the form accurately and correctly so you can keep every penny of the funding you deserve.