PPP 2.0: Helping Your Client Apply for Loan Forgiveness

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The Paycheck Protection Program (PPP) was a lifeline for the millions of small businesses that received forgivable loans. But now, time might be ticking for the process of applying for forgiveness.

If your clients were some of the lucky businesses able to get their hands on a PPP loan, they may ask for guidance in navigating the ins and outs of the forgiveness process.

5 Steps of helping your client apply for PPP loan forgiveness

When it comes to the PPP, there are two major applications borrowers need to complete:

  • Apply for PPP loan (check)
  • Apply for PPP loan forgiveness (almost check) 

Thankfully, the forgiveness process keeps getting easier—for certain businesses. Your client’s application requirements depend on the loan amount and whether they made employee cuts. 

Whether this is your client’s first or second PPP loan, they might have questions. So without further ado, here are five steps of applying for PPP loan forgiveness. 

1. Go over potential forgiveness

Borrowers should understand the requirements for complete and partial loan forgiveness before applying for forgiveness. That way, they can maximize their forgiveness amount. 

When going over the requirements for forgiveness, here are a few things to talk with your client about:

Spending the PPP loan on qualifying expenses

  • Payroll costs (60%): Salaries, wages, commissions, or tips; employee benefits; state and local taxes
  • Non-payroll costs (40%): Mortgage interest, rent, utilities, operations expenditures, property damage, supplier costs, worker protection expenditures

Maintaining full-time equivalent (FTE) employee count*

Keeping wages up*

*If your client took out a loan greater than $50,000, their forgiveness amount may be decreased if they did not maintain employee levels or wage amounts.

Talk with your clients about how they used their PPP loan proceeds. If your client hasn’t used their loan yet, remind them to use it on qualifying expenses and to maintain employee and wage levels. 

2. Gather documents

PPP borrowers should maintain clear and organized records on loan usage. This helps them prove claims on their forgiveness application. Not to mention, organized documents make it easy for you to help them apply. 

Take a look at this not all-inclusive list of documents you should gather from your clients and/or advise them to put together:

  • Bank account statements
  • Tax forms
  • Payroll tax filings (e.g., Form 941)
  • State quarterly employee wage reporting and unemployment insurance tax filings
  • Receipts verifying non-payroll payments 

After reviewing your client’s records, you can give them an idea of the forgiveness amount they should expect. If it’s less than the amount of their loan, your client may have questions about paying back the remainder of their loan. 

3. Advise clients to contact their lender

You are your client’s accountant, not their lender. You won’t be able to give them all the answers relating to PPP loan forgiveness, but their lender can.

Advise clients to communicate with their lender throughout the process. Talk to your clients about asking their lender:

  • About loan forgiveness requirements
  • What documents to bring when applying for forgiveness
  • Which forgiveness application form they should use

4. Help prepare or review forgiveness application form 

The Small Business Administration’s loan forgiveness application form comes in three versions: Form 3508, 3508EZ, and 3508S. Your client’s lender may use these forms or a lender equivalent. 

Here is a brief overview of the three SBA forms:

Form 3508: This is the longest PPP loan forgiveness application form. Borrowers who took out more than $150,000 in loans or reduced their FTE employees, employee wages, or both must use this form. This version of Form 3508 is broken down into a calculation form, Schedule A, Schedule A worksheet, and signature/authorization form.

Form 3508EZ: Borrowers who took out more than $150,000 can use this form if they are self-employed with no employees or meet the FTE and wage qualifications. Form 3508EZ has a calculation form and signature/authorization form. 

Form 3508S: Form 3508S is reserved for borrowers who took out loans of $150,000 or less. With only a signature/authorization page requiring basic loan information, this version of the loan forgiveness application form is the easiest to use. 

All SBA versions of Form 3508 have an optional demographic information form. 

You can help your accounting client go through their application form step by step, or you can review their form before they submit it. Knowing they have a professional double-checking their form may put your client’s mind at ease. 

5. Advise on PPP loan appeal 

Unfortunately, not all PPP borrowers will receive complete loan forgiveness. If you or your client think there’s been a mistake, you might advise your client to appeal the decision.

A PPP borrower who wants to appeal the SBA’s loan review decision has 30 calendar days after either receiving the SBA’s loan review decision or the lender’s notification of the SBA’s loan review decision (whichever is earlier). 

To appeal the loan forgiveness decision, the PPP borrower must provide a number of documents, including:

  1. Evidence that your client timely filed the appeal 
  2. A copy of the SBA loan review decision being appealed
  3. A statement explaining why your client believes the review decision is incorrect
  4. What your client is hoping to receive
  5. Signed copies of payroll tax filings reported to the IRS, state quarterly employee wage reporting copies, and unemployment insurance tax filings (if not included with forgiveness application form)
  6. Signed copies of federal tax returns and schedules filed with the IRS (if not included with the PPP borrower application form)
  7. Your client’s or their attorney’s name, address, phone number, email address, and signature

Your client should receive a ruling within 90 days of their appeal. The final ruling either affirms, reverses, or remands the SBA loan review decision. 

Tips to navigate clients through the forgiveness process 

For many, the intricacies of the Paycheck Protection Program were overwhelming. As your clients’ trusted advisor, you can help them take advantage of the popular program by:

  • Keeping in touch with clients throughout the covered period to remind them to use their loan on qualifying expenses 
  • Letting your clients know they can reach out to you with any questions or concerns
  • Reminding clients of loan forgiveness deadlines
  • Staying on top of the changing legislation that could shake up forgiveness requirements
  • Thoroughly reviewing your client’s application form before they submit
  • Helping them understand why their loan isn’t fully or partially forgiven and advising on the appeals process, if applicable