While some banks are beginning to accept PPP Forgiveness applications, others are still waiting for more information from the SBA.  Also, while some banks are allowing forgiveness applications to be submitted when the loan proceeds are spent (such as TD Bank), still others are waiting until your covered period is over (Bank of America), and there are even more banks that are only accepting forgiveness applications via email invitation in order to provide “better customer service.”  It is important to note that your particular covered period could be 8 or 24 weeks, depending on which election you choose when you apply for forgiveness, and your particular situation.  Due to the updated guidance for the Independent Contractors, Freelancers, and those who are self-employed issued in June, these individuals may wish to choose the longer covered period to obtain forgiveness more easily.  Here is a segment of the guidance:

The SBA and Department of Treasury had “determined that it is appropriate to limit the forgiveness of owner compensation replacement for individuals with self-employment income who file a Schedule C or F to either eight weeks’ worth (8/52) of 2019 net profit (up to $15,385) for an eight-week covered period or 2.5 months’ worth (2.5/12) of 2019 net profit (up to $20,833) for a 24-week covered period per owner in total across all businesses.”

This means that if you do not have a lot of covered expenses like rent, business mortgage interest, or utilities, you can opt for the extended covered period of 24 weeks (instead of the original 8) and will most likely receive full forgiveness.

Keep in mind that banks may be slowly rolling out forgiveness due to the provision that once the application for forgiveness has been submitted, they only have 60 days to make a ruling on that application.  Here is where we get some good news.

Due to the potential log jam in making ruling on these smaller loans, on October 8th the SBA and Department of the Treasury issued a new streamlined forgiveness application that is only 2 pages.  This application (Form 3508 S) can be utilized by those companies who have received PPP Loans of $50,000 and less.  While you will still need to send in supporting documentation with this streamlined application, the hope is that the turn around time will be much much quicker, and your administrative headache will be much smaller.

If you are an Independent Contractor, sole proprietor or self-employed your documentation could also be much easier with this new streamlined application.  According to this Bench.co article:  “you are eligible to take owner compensation replacement (OCR). If you are taking OCR, you will have to provide your 2019 Schedule C (or a drafted Schedule C for January to February 2020 reviewed or prepared by a CPA if you started your business after June 2019). Your forgiveness amount will be based on the 2019 Schedule C or drafted January to February 2020 Schedule C provided. You can calculate this number by taking 8/52 or 24/52 (depending on your covered period) of the net income reported on line 31 of the Schedule C.”

We continue to get more information about this program, and as we do we will work to keep you all informed.  As always, please keep in touch with your bank to the extent that you can, and make sure that your CPA’s and other advisors are kept up to date.

Have a great week, and best of luck!

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