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How to fill out the PPP EZ forgiveness application
Make sure you qualify first before you follow these 7 steps to apply.
One of the main benefits of the Paycheck Protection Program (PPP) is that businesses can qualify for up to 100% forgiveness, if they spend at least 60% of the funds on payroll costs and keep the same staff at close to the same salary.
If your business received a PPP and didn't lay off employees or reduce salaries may be eligible to fill out a simplified forgiveness application. The PPP Loan Forgiveness Application Form 3508EZ, or EZ forgiveness, requires fewer calculations and documentation than the full forgiveness application. Both applications should be available through your lender.
How do I qualify for EZ forgiveness?
Your business must have already received a PPP loan and meet one of the following criteria to qualify for EZ Forgiveness:
- Self-employed with no employees
- Didn't reduce employee wages by more than 25% and didn't reduce hours during the covered period
- Didn't reduce wages by more than 25% during the covered period and experienced financial losses as a result of coronavirus-related health directives
If your business experienced a loss from government shutdowns, it can still qualify for the EZ forgiveness application, even if it had to cut employee hours. But employee wages must stay within 25% of precoronavirus salaries.
There is one exception to the 25% salary reduction rule. The PPP only covers annual wages up to $100,000 per employee. So an employee making over $100,000 could have their salaries reduced all the way down to $75,000 without affecting your business's eligibility for EZ forgiveness.
What is the covered period?
The covered period is the period of time where your business's eligible payroll spending counts toward PPP forgiveness. For this application, you'll need to know which traditional covered period you're eligible for and whether you want to use an alternative covered period.
The traditional covered period varies depending on when you applied.
- Loans funded before June 5: Covered period starts the day your business receives the loan and ends eight weeks later.
- Loans funded after June 5: Covered period starts the day your business receives the loan and ends 24 weeks later.
The alternative covered period is meant to make calculating forgiveness easier for businesses that distribute payroll every two weeks or more frequently. The alternative covered period starts the first day of the pay period after your business receives PPP funding. And it ends either eight or 24 weeks later, depending on when your loan was funded.
How do I apply for PPP forgiveness using the EZ form?
If you think you qualify, ask your lender for an EZ Forgiveness form. While forgiveness forms might differ depending on the lender, they'll generally contain the same information as the sample version on the Small Business Administration (SBA) website.
Since a lot of the required information was also required on the PPP loan application and documents, it's helpful to have your original application on hand to make sure there are no inconsistencies.
Step 1: Fill in your basic business information
At the top of the application, provide the following information about your business — just as you did on the PPP loan application:
- Business legal name ("borrower"): Write the name that your business uses on its legal registration forms and official documents.
- DBA or trade name: Write the name customers know your business by, if it's different from your business's legal name.
- Business address, phone number, email and primary contact: Use the same contact information you entered on your PPP loan application, unless it's changed since you applied.
- Business TIN, EIN or SSN: Enter your business's tax ID number, employer ID number or your Social Security number. Stick with the number you used on your PPP application.
Step 2: Provide information about your PPP loan
Have your PPP loan agreement on hand before you get started on this step. Then use it as a source to provide the following information:
- SBA PPP loan number: Use the number that the SBA gave your PPP loan when it was approved.
- Lender PPP loan number: Use the number that your lender assigned your PPP loan once it was approved. This should be different from the SBA number. Reach out if you're not sure which is correct.
- PPP loan amount: Enter the total amount you received in PPP funding.
- PPP loan disbursement date: Enter the date your business received the PPP loan. If it was disbursed over multiple days, use the first day you had access to the funds.
- Employees at time of loan application: Write the number of employees you reported on your PPP loan application.
- Employees at time of forgiveness application: Enter the number of employees today, the day you're filling out the application.
- EIDL Advance amount: If your business received a grant through the Economic Injury Disaster Loan (EIDL) program, write the exact amount. Otherwise skip this step.
- EIDL application number: Provide the application number the SBA gave your business after applying for an EIDL, if applicable.
Step 3: Provide information about your covered period
This section is where you let the SBA know what period of time you're including when calculating your forgiveness amount.
- Payroll schedule. Select your company's payroll frequency — this helps the SBA determine if you're eligible for an alternative covered period starting the payday after your business receives the funds.
- Covered period: Write the start and end date of the traditional covered period you qualify for — even if you're using the alternative covered period.
- Alternative payroll covered period: If your business is using an alternative covered period, write that start date and end date here.
- Loans over $2 million. Check the box if the combined PPP funding for your business and all affiliates was over $2 million.
Step 4: Calculate your total eligible payroll costs
It helps to have your business's accounting information on hand when you're completing these next few steps. This is where you'll add up all eligible payroll expenses. Find the sum of the following amounts:
- Cash compensation. Add up all gross salaries, wages, tips, commissions, paid leave — excluding leave covered by the Families First Act — and allowances for dismissal or separation. Employee compensation can't exceed $15,385 for an employee on an eight-week pay period or $46,154 on a 24-week covered period.
- Employee benefits. Add up the total amount the business paid toward health insurance plans, retirement plans and state and local taxes based on employee compensation. Don't include taxes withheld from employee earnings. Also exclude pre- or post-tax employee health insurance and retirement contributions. And don't include contributions for self-employed individuals, general partners or anyone else who includes health insurance costs in their cash compensation.
- Owner compensation. Enter the amount that the business paid to owners. This is capped at $15,385 for an eight-week covered period or their 2019 compensation divided by 52 and multiplied by eight — whichever is lower. For a 24-week covered period, this is capped at $20,833 or a 2.5 month equivalent of their 2019 compensation.
This is your total eligible payroll cost. Enter the amount in line 1.
Step 5: Add up your nonpayroll costs
This is where you disclose how much you spent on other eligible expenses:
- Business mortgage interest payments: Enter all interest you paid on a mortgage for business use during the covered period or alternative covered period your business is using in line 2. Only include mortgages that were originated before February 15. If you lease part of the building out, don't include that portion in your calculation.
- Business rent or lease payments: Enter the amount your business spent on rent and leasing during the covered period or alternative covered period your business is using in line 3. Only included costs from contracts that began before February 15. If you sublet part of the building out, don't include that portion in your calculation.
- Business utility payments: Enter the amount your business made toward utilities for service that began before February 15 in line 4.
Step 6: Calculate your potential forgiveness
To calculate your forgiveness amount, you first need to add up three different potential forgiveness amounts. Whichever is lower is the amount you qualify for.
- Potential forgiveness amount 1: Add up the sum of the numbers you entered on lines 1, 2, 3 and 4. That's your payroll costs, mortgage, rent, lease and utility payments. Enter that in Line 5.
- Potential forgiveness amount 2: Enter your full PPP loan amount in line 6.
- Potential forgiveness amount 3: Divide line 1 (your payroll costs ) by 0.60 and enter the result in line 7.
Go over your potential forgiveness amounts and write the lowest number in line 8. This is your forgiveness amount. If you received an EIDL advance, the SBA will deduct that from the forgiveness amount given to the lender — you don't have to deduct it on your application.
Step 7: Read and sign the representations, certifications and application
Go over the representations and initial next to each statement to signal that you understand the terms of forgiveness and potential penalties. Then sign and date the forgiveness form.
Step 8: Fill out the PPP borrower demographic information form — optional
If you like, fill out the form on the last page with information about the demographics of your company's ownership or leadership — the principal. Select the number or letter that corresponds to the owner's veteran status, gender, race and ethnic identity in the box. And write the principal's name and position at the top.
What documents do I need to submit?
You're required to submit the following documents to your lender along with your EZ application form. They should be inclusive of either the covered period or the alternative covered period that you're using to calculate your PPP loan forgiveness amount.
- Bank account statements
- Federal tax filings that have been or will be reported to the IRS
- State quarterly business and individual wage reports
- State unemployment insurance tax filings
- Proof of contributions to health insurance and retirement plans, like receipts or account statements
- Proof of mortgage interest payments, such as statements, receipts or an amortization schedule
- Proof of rent or lease payments, like receipts, lessor account statements or a copy of your lease
- Proof of utility payments, such as invoices, receipts, canceled checks or account statements
- Proof of the number of full-time equivalent employees on payroll January 1 and at the end of the covered period
If you used a third-party service provider, you can file reports from that provider instead of your bank account statements and tax forms. Your business will also need to retain documents that can further prove your eligibility for forgiveness — such as proof that your business made a good faith effort to rehire employees or find replacements who were similarly qualified.
See top lenders for additional funding
If you need more financing for your business, use the table below to compare options that could be available to you. Select the ranges for the loan amount you're interested in, last 12 months of revenue, time in business and your personal credit score to get started.
How do I qualify for 100% forgiveness?
You can qualify for 100% forgiveness if you spent at last 60% of your loan on eligible payroll expenses. Otherwise, you can still qualify for a reduced forgiveness amount. Read our guide to getting full PPP loan forgiveness to learn more about how it works.
EZ forgiveness might be less time consuming than your standard PPP forgiveness application. But make sure that your business is eligible before you figure it out. Check with your lender if you're not sure.
And if you need more funding, read our guide to financing your business during the coronavirus outbreak to learn about other options.
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