The Senate just recently extended the deadline for businesses to apply for the PPP loan program. The program was expected to expire June 30, 2020; however, to date, there have been approximately $130 billion funds left unclaimed. The new extension allows businesses to ensure they receive the funds they desperately need.
What does this extension mean for business owners and what businesses need to know?
Businesses will now have until August 8th to apply for the PPP program. This program provides funds to companies in the wake of COVID-19. Business entities with employees and self-employed individuals (1099 workers, freelancers, artists, contractors without employees) are encouraged to apply. Also, keep in mind, nonprofits are also able to apply for the PPP program.
Here is how to spend your funds for forgiveness
If you do receive the PPP funds, you can have these funds forgiven. Entities must ensure they utilize the funds for payroll, owner’s compensation, mortgage, utilities, and interest. Under the revised PPP guidelines, entities must use at least 60% for payroll costs and 40% for non-payroll expenses to ensure full forgiveness.
It is essential to document these expenses through a substantiated source, such as a check record. Taking this step can serve as proof of payment upon forgiveness.
What records are required to apply for the PPP?
The type of records required will depend on the business type. For instance, if you are an entity that hires employees, you will be required to submit payroll tax reports from previous periods. Whereas, if you are a self-employed individual, you may be required to provide your 1099s along with a copy of your 2019 Schedule C form to apply.
Where should a business consider applying if they are seeking funding?
Entities should consider both online and traditional banks for funding. Online financial institutions such as Paypal, Kabbage, Square are a few online options. Also, consider checking with your local financial institution to determine if PPP loan options are still available.
Remember, your choice, your future!!!
Continue to read Psalm 91 during this time! For more tips, subscribe to #kemcents YouTube channel. Kemberley Washington, CPA, is a best seller author, news contributor and owner of Washington CPA Services, LLC. She contributes to her blog Kemberley.com and 21dayso