‘Easiest way' to fill out PPP loan forgiveness application

WASHINGTON — Recipients of a Paycheck Protection Program (PPP) loan can save time by utilizing a simplified PPP forgiveness application, if the recipient falls into one of three categories.

The National Federation of Independent Business (NFIB) hosted a webinar July 22 focused on how to fill out PPP Loan Forgiveness Application Form 3508EZ.

"This is by far the easiest way to fill out a forgiveness application," Holly Wade, director of research and policy analysis for NFIB, said. "It's basically two pages, and then you are done."

The Small Business Administration (SBA) provided businesses with 500 or fewer employees PPP loans that are fully forgiven if used for payroll, interest on mortgages, rent and utilities.

The business must spend at least 60% of the loan on payroll. Loans were awarded to cover 8-week or 24-week periods.

The loan period starts the date PPP funds were dispersed to the borrower and continues through either the 8- or 24-week period of the specific loan.

"Start with the 3508EZ," Beth Milito, who is responsible for managing litigation and amicus work for NFIB, said. "Most borrowers are going to be able to use this form.

"… If you are able to check one of the first three boxes (in the 3508EZ form), you won't have to fill out the FTE (full-time equivalent) calculations required under the longer form worksheet."

To qualify to fill out the form, borrowers must meet criteria in one of three categories.

The first is if the borrower is a self-employed individual with no employees at the time of the PPP loan application and did not include any employee salaries in computation of average monthly payroll, according to the SBA.

The second category is if the borrower did not reduce employees' annual salary or hourly wages by more than 25% between Jan. 1 and March 31, or if the borrower did not reduce staffing levels during the pandemic.

"If you haven't changed the number of employees, … then you satisfy that condition and you can go forward," Ms. Wade said. She said borrowers will have to provide documentation to prove the number of employees on Jan. 1 is the same as it is at the end of the loan period.

She noted that if you furloughed an employee and tried to hire them back but they declined, then that won't be held against you.

The third category is for businesses that did not reduce salaries or hourly wages by more than 25% for employees, but could not maintain normal business because of state and federal COVID-related guidelines.

"This is the box that most businesses will check," Ms. Wade said.

This includes those who may have reduced store hours or added steps to their business workday to increase COVID response, like for example, using that time to clean.

For businesses like tire dealers, this would include having to limit the number of people in buildings as well as state stay-at-home orders that significantly impacted foot traffic.

"Max out on payroll," Ms. Milito advised listeners to the webinar. "That's the way to maximize the forgiveness of your loan."

The NFIB said many lenders are not currently accepting PPP forgiveness loan applications because they are waiting on the SBA to finalize lender guidelines.

"We're hopeful that by next month, lenders will open up portals (online) to process the applications," Ms. Milito said. She noted that because additional documentation is required, it is a good idea to start the process early, so borrowers are ready when more lenders are accepting the applications.

NFIB also noted a bill — the PPP Small Business Forgiveness Act — that has been introduced in the Senate to simplify the loan forgiveness process and allow those receiving loans of less than $150,000 a simplified one-page form.

Additionally, there still is concern from small businesses that the pandemic may stretch longer into the year.

"NFIB is calling on Congress to allow small businesses that continue to suffer clear economic losses to apply for a second PPP," NFIB said.

For PPP and COVID resources or to learn more about NFIB, visit nfib.com.