Paycheck Protection Program loan forgiveness
iLast month, I told you about Paycheck Protection Program loans and how they can help land trusts meet payroll during the pandemic.
These loans are forgivable if certain conditions are met. Now we know more about those conditions. On May 15, the Small Business Administration and the U.S. Department of Treasury issued SBA Form 3508, the Paycheck Protection Program Loan Forgiveness Application. It includes guidance and worksheets for calculating loan forgiveness. Specifically, SBA Form 3508:
- outlines forgivable payroll expenses and non-payroll expenses, clearly stating that eligible non-payroll expenses may not exceed 25% of the total forgiveness amount;
- includes a page of “Representations and Certifications” regarding the use of the funds, which should be carefully reviewed;
- outlines the calculation used to determine whether forgiveness will be reduced following any decrease in the number of full-time equivalent employees and/or a decrease in employee salaries and wages;
- requires the name of each employee, plus the last four digits of their social security number and their compensation;
- establishes an “Alternative Payroll Covered Period” that begins on the first day of the first pay period for borrowers with a biweekly or more frequent pay periods; and
- includes a detailed list of documents that must be submitted with your application as well as documents that must be maintained – but not submitted – for six years after the loan is forgiven.
The new SBA Form 3508 is here. If you have any questions about the form, I recommend working with the lending institution from which you obtained your Paycheck Protection Program loan.
If you have not applied for a PPP loan, but are interested in doing so, applications are still accepting. You can find more information here.
Stay safe and healthy.
Lori Faeth is government relations director for the Land Trust Alliance.