The loan from the QuickBooks Paycheck Protection Program (PPP) would require repayment or allow forgiveness for eight weeks for the total number of full-time workers that you hire. Forgiveness occurs only if the total number of workers is less than the number of full-time employees you have hired between either 15 February 2019 and 30 June 2019 or 1 January 2020 and 29 February 2020, respectively. You also need to keep in mind that no more than 25% of the loan forgiveness amount allows for non-payroll costs.
How to Help Qualify for QuickBooks Paycheck Protection Program Loan Forgiveness
You would need to meet certain requirements in order to improve the chances of having your PPP loan forgiveness. These include:
Keep your workers on the payroll: You need to have the same number of employees on the payroll that you hire between February 15, 2019 and June 30, 2019. In case, your business wasn’t open then maintain the number of employees that you had between January 1 and February 15, 2020. It is acceptable if you have laid some employees off since February 15. You need to hire then back before June 30, 2020
Maintain employee salaries and wages: It is necessary to maintain the employee salaries and wages as it is. The Loan can cover annual payroll costs, up to $100,000 per employee. If you reduce employee pay by 25% then it may reduce the chances of loan forgiveness. If you already reduced then restore them normal salary and wages.
Record all payroll costs and how you have spent your loan: It is important to have accurate records of employee payroll expenses as well as the loan amount you spend. So, stay organized and keep a track of spending on things such as healthcare premiums and employee benefits. You may be required to prove your loan spend if you apply for forgiveness.
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Additional Qualifying Expenses under the QuickBooks Paycheck Protection Program (PPP)
Apply Paycheck Protection Program loans are mainly for the expense of payroll. And when it comes to a loan being forgivable, the SBA anticipates that no more than 25 percent of the amount forgiven will be for non-payroll expenses. But lenders can still spend funds on other expenses that can be forgiven.
Additional Forgivable Expenses Include
💠 Employee expenses related to payroll
💠 Vacation, medical, parental, family, or sick pay
💠 Allowance for dismissal or separation
💠 Health insurance premiums and group healthcare benefits
💠 Retirement benefits
💠 Local or state taxes related to employee compensation
💠 Cash tips or equivalent for tipped workers
💠 Business utilities such as electricity, water, and gas
💠 Communication such as internet access or telephone
💠 Rent or mortgage provided the lease or owner agreement signed before February 15, 2020
Even if you can’t get your loan forgiven, knowing that the terms of the loan are generous may help. And if your non-payroll expenses surpass your payroll costs, there are other loan programs for the Small Business Administration which may provide relief.
What Else May Impact your Forgivable Amount?
Reducing the Number of Employees
💠 If the total number of full-time equivalent employees that you hire during the eight-week period after the lender sent your PPP loan funds to you is less than the total number of full-time equivalent employees per pay period between:
💠 February 15, 2019 and June 30, 2019, or
💠 January 1, 2020 and February 29, 2020
Reducing Employee Salary or Wages
The loan forgiveness amount can reduce if you reduce the total wages or salary for any workers during the period of 8 weeks. after the lender sent your PPP loan funds to you, if it is more than 25% as compared to the most recent full quarter before eight weeks. If the reductions are made between February 15, 2020 and April 26, 2020 which are reversed by June 30, 2020 then your loan forgiveness amount cannot be reduced. This forgiveness reduction is not applicable to those employees who had a salary or wages of more than $100,000 in 2019.
Economic Injury Disaster Loan Advance
In any case, you received an advance through the EIDL program then it will be deducted from your forgivable amount on a PPP loan.
How to Apply for QuickBooks PPP Loan Forgiveness
If you are a Paycheck Protection Program loan recipient then you have to submit a forgiveness application to your lender. Once you submit an application then the lender determines the eligibility of loan forgiveness. To apply for loan forgiveness, you have to submit an application including the following relevant information for the 8-week period after the lender sent you the PPP funds:
💠 Payroll tax filings
💠 State income, payroll, and unemployment insurance filings
💠 Canceled checks, payment receipts, transcripts of accounts, or other documents verifying payments on mortgage obligations, payments on covered lease obligations, and utility payments
💠 Documentation of any advance received under the CARES Act EIDL Emergency Grant program.
💠 Important note: Once you submit an application for forgiveness, your lender will have 60 days to accept or deny your application.
If you’re a Form 1040 Schedule C filer
Under Small Business Administration (SBA) April 20, 2020, there are certain rules applicable for Schedule C filters have to submit an application with the following relevant information for the 8-week period after the lender sent you the PPP funds:
💠 If you have employee, payroll and unemployment insurance filings, and payroll tax filings and state income.
💠 if you claimed or are entitled to claim a deduction for such expenses on your 2019 Form 1040 Schedule C, canceled checks, payment receipts, transcripts of accounts, or other documents verifying payments on mortgage obligations, payments on lease obligations, and utility payments
💠 2019 Form 1040 Schedule C that was provided to your lender at the time of your PPP loan application
💠 Documentation of any advance received under the CARES Act EIDL Emergency Grant program.
In conclusion
So, this is information related QuickBooks PPP Loan Forgiveness on Payments to Owners. Additional information and exceptions may apply or applicable laws may vary according to state or locality. To explore more, you can easily connect with QuickBooks Paycheck Protection Program support toll-free number as they are available all round the clock. You can also drop an email support@usingpos.com or do a QuickBooks live chat.
