- Question: Which loan forgiveness application should sole proprietors, independent contractors, or self-employed individuals with no employees complete?
Answer: Sole proprietors, independent contractors, and self-employed individuals who had no employees at the time of the PPP loan application and did not include any employee salaries in the computation of average monthly payroll in the Borrower Application Form automatically qualify to use the Loan Forgiveness Application Form 3508EZ or lender equivalent and should complete that application.
- Question: If a borrower submits a timely loan forgiveness application, does the borrower have to make any payments on its loan prior to SBA remitting the forgiveness amount, if any?
Answer: As long as a borrower submits its loan forgiveness application within ten months of the completion of the Covered Period (as defined below), the borrower is not required to make any payments until the forgiveness amount is remitted to the lender by SBA.
- Question: Covered utility payments, which are eligible for forgiveness, include a “payment for a service for the distribution of . . . transportation” under the CARES Act. What expenses does this category include?
Answer: A service for the distribution of transportation refers to transportation utility fees assessed by state and local governments. Payment of these fees by the borrower is eligible for loan forgiveness.
Many accountants had been hoping that transportation included a bit more than just the utility fees assessed by some state and local governments. This FAQ goes into more detail on the calculation of forgiveness and how to correctly report wages. Question 8 under the “Loan Forgiveness Payroll Costs FAQs” section goes into detail about each business type and how owner compensation is to be calculated. All of the information aligns with expectations from the previous law changes – there is nothing surprising or new on this topic. The examples in the FAQ will help many people understand exactly what they are doing with the forgiveness application. Please read the document here.