New Paycheck Protection Program loan forgiveness for small businesses.
It’s no secret that small business owners have been up against some tough challenges this year, but there’s good news too. The Small Business Administration (SBA) is offering complete forgiveness on Paycheck Protection Program (PPP) loans of $50,000 or less.
What is the Paycheck Protection Program?
The Paycheck Protection Program is a loan that has been helping small business owners keep their employees on the payroll during COVID-19. This loan covers up to 8 weeks of payroll costs and benefits and can also be used to pay mortgages, rent, and utilities.
The Paycheck Protection Program was initially issued under the CARES Act. Now, the SBA has released new loan forgiveness guidelines for smaller borrowers, making it easier to request small loans and go through the forgiveness process.
Who is Eligible for PPP Loan Forgiveness?
If your business borrowed $50,000 or less, you can request to have your loan fully forgiven.
What is New for the Paycheck Protection Program?
The SBA is simplifying loans and forgiveness for the Payroll Protection Program with a new one-page form for small borrowers and also easing some of the requirements. Form 3508S has fewer calculations than the previous form and allows employers to file quickly.
The new guidelines for small borrowers also lift some of the requirements for PPP loan forgiveness. Previously, employers had to keep all their employees on payroll or rehire them immediately and keep salary levels consistent. They also needed to use at least 60% of their PPP loan towards payroll expenses in order to be eligible for full forgiveness.
Now, for PPP loans of $50,000 or less, businesses can get total forgiveness even if they had to scale back or make payroll cuts during this time.
How to Get PPP Loan Forgiveness
If your business borrowed $50,000 or less, you can file Form 3508S for full loan forgiveness. If your PPP loan exceeded $50,000, you can still calculate and apply for PPP forgiveness with the SBA.
How To Report PPP Loans
Whether your PPP loan is fully or partially forgiven, you need to file Form 941 to report your withholdings from employee paychecks and avoid IRS penalties. This year, the IRS has majorly revised the Employers Quarterly Federal Tax Return to reflect COVID-19 tax relief. Click here for everything you need to know about all the new lines on Form 941.
Under the Paycheck Protection Program Flexibility Act, employers can still opt to defer employment taxes if they received a PPP loan. Your business can report any deferment decisions on the newest fields of Form 941.
If you received a PPP loan, you probably weren’t eligible for all the refundable tax credits associated with COVID-19, there are certain new data-entry fields you will need to leave blank on the updated Form 941.
During COVID-19, avoiding penalties, making good decisions about tax relief, and navigating IRS requirements safely can be the difference between facing financial strain or thriving as a small business owner. At ExpressEfile, we’re here to walk you through your filing process and catch mistakes before the IRS does.
We offer easy e-filing, U.S.-based support, the lowest price in the industry. When you need to meet your Form 941 deadline, we’re here to help.