Stan Reiff, Partner at CapinCrouse, joins Joe Park, CEO at Horizons Stewardship, to unpack how to apply for PPP loan forgiveness. This is a densely packed presentation. If you missed the webinar, you will be able to find a video recording along with the supporting white paper “Applying for PPP Loan Forgiveness” in Giving365, Horizon Stewardship’s free on-demand resource library of finance, stewardship, and generosity materials for pastors, church staff, and volunteer leaders. You can create a FREE account today if you’re not already a Giving365 member.

If you would like a CPA review of your PPP loan forgiveness application or assistance in completing your application, you can reach out to Stan Reiff (sreiff@capincrouse.com) directly. CapinCrouse is offering an affordable service to assist you and your church in applying for loan forgiveness. The total cost will depend on a variety of factors. Most church fees for this service will fall between $500 and $3,500.

I’m Ready to Apply, but My Lending Institution Isn’t

This is not an uncommon statement. Many lending institutions are still preparing their own version of the electronic application. You will need to wait to complete the PPP loan forgiveness application until those are ready. In the meantime, you can use the loan forgiveness application provided by the SBA to help you prepare to complete the form.

Most Recent Considerations Regarding PPP Loan Forgiveness Eligibility

There have been a number of updates to the PPP loan and loan forgiveness process since it was first introduced by the SBA. A few highlights are:

  • The SBA will make the final decision on the amount of your loan that will be forgiven.
  • There are a number of certifications that you'll need to sign off on just like you did in your original application. These are largely focused around completeness and accuracy of information, acknowledge that you understand that fraud or improper use of funds is subject to prosecution, and the SBA reserves the right to request additional information, if necessary, to inform their final decision.
  • The Covered Period is now 24 weeks or 168 days. If you took the loan prior to June 5, you can choose the 8 week, 56-day period.
  • Payroll costs are considered incurred on the day that the employee's pay is earned.
  • The salary and wage reduction amounts exceeding 25 percent for any employee (weekly or hourly) can impact your level of forgiveness.
  • Computing full-time employees (FTEs) is vital. There are multiple ways to calculate. Use the one that provides you the most benefit and is most favorable to your organization.
  • There are some safe harbor provisions related to staffing levels. (See pages 14-16 of “Applying for PPP Loan Forgiveness”)
  • EIDL grants will be subtracted from the loan forgiveness amount.
  • Any interest or payments are deferred for six months.

Can My Church Use the Shorter Application 3508EZ?

To use the short application 3508EZ, you must meet one of three eligibility requirements detailed on pages 16 and 17 of “Applying for PPP Loan Forgiveness.”

Documentation You Will Need

Hopefully, you’ve been keeping documentation of PPP loan funds as they have been used. Now is the time to make sure all the documentation is in order. The most common types of documentation that you’ll need will include but are not limited to:

  • Bank Statements
  • Payroll Registers
  • Form 941 (for every quarter PPP loan funds were used)
  • Income, payroll, and unemployment tax filing with state authorities
  • Payment receipts for health insurance, retirement plan contributions, etc.
  • FTE reduction documentation
  • Salary and wage reduction documentation
  • FTE reduction for safe harbor provisions
  • Mortgage Interest Documentation
  • Rent Documentation
  • Utility Documentation

What Happens If My PPP Loan is Not Fully Forgiven?

It is possible that some or all of your PPP loan funds will not be forgiven. A best practice is to include more loan forgiveness documentation than your maximum forgiveness amount, in the event some of your request is deemed not forgivable. Should you disagree with your lending institution or the SBA, you will be able to:

  • Appeal to the SBA if you disagree with your lender’s conclusion
  • Choose to repay the unforgiven amount in full without penalty
  • Choose to repay the unforgiven amount with no penalty over multiple years at one percent interest

Disclaimer: The webinar recording and companion white paper resource available in Giving365 provides a comprehensive look at Paycheck Protection Program (PPP) loan forgiveness with the lender, including changes arising from the enactment of the Paycheck Protection Program Flexibility Act of 2020 (PPP Flexibility Act) and subsequent Small Business Administration (SBA) guidance. The PPP loan forgiveness process with the lender is a separate and distinct process apart from the accounting and recognition of revenue in accordance with Generally Accepted Accounting Principles (GAAP) for accounting and financial reporting purposes. The timing of revenue recognition for GAAP purposes may be different than the date and timing of the loan forgiveness with the lender. Organizations should consult with their accountants and auditors to address the GAAP accounting and revenue recognition guidance related to PPP loans.

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