Watch the video below to get all of the details about the SBA Forgiveness Portal for PPP Loans. Enjoy!
Links Mentioned In This Video:
- SBA Forgiveness Portal for PPP Loans – https://teachingmillionaires.com/sba-forgiveness-portal
- Rich Guide on How to Pay Yourself PPP Loan – https://teachingmillionaires.com/how-to-pay-yourself-ppp-loan-self-employed
- FREE $25 SoFi Money Account for Your PPP Loan – https://teachingmillionaires.com/recommends/sofi-bank-account
- How to PPP Loan Forgiveness Video and Application – https://teachingmillionaires.com/everything-you-need-to-know-about-how-to-fill-out-ppp-loan-forgiveness-application-form-3508s
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- Checklist for PPP Loan Forgiveness Folder & Documentation:
- Bank Statements for you business 2019 & 2020
- Filed Tax Forms 2019 & 2020, including full 1040 with Schedule C
- Bank Statements showing initial PPP funds deposits and transfers or withdrawals of PPP funds
- Join Rich’s Private Facebook Community – https://www.facebook.com/groups/teachingmillionaires
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The SBA has announced that they are opening their own fast forgiveness, PPP loan, forgiveness portal. That’s right. The agency that has overseen PPP one and PPP two is now taking on the forgiveness process. So today I’m going to share with you how that’s going to work and give you a little background information in case you’re a little confused about all the different rule changes and how forgiveness works. You’re not going to want to miss this.
You heard, right! The SBA is opening its own fast forgiveness portal for PPP loans. This is specifically geared towards PPP loans that are under $150,000. So that applies to most self-employed independent contractors and sole proprietors. The reason this is such a big change is because for over a year, anyone who has wanted to apply for PPP loan forgiveness has had to go directly to the lender where they got their money. And now this changes everything because if the lenders opt in, then you can get direct forgiveness by applying directly with the SBA. Now, this is huge news that applies to 95% of the people out there. So let’s dive into how PPP one and PPP two are supposed to work all the little changes and how forgiveness is supposed to work as well. Oh, Hey, and real quick, if you haven’t already go ahead and hit that little thumbs up button, it really helps spread the word about this video.
I think it’s a topic a lot of people really need to know about. I really appreciate it. So thanks so way back in April of 2020 small business owners independent contractors, the self-employed and all other United States businesses could apply for a PPP loan. These funds originally were designed to replace a little bit of payroll and some approved expenses during the government mandated shutdown. Now, to be clear, they were only supposed to cover about 2.5 months worth of the payroll and approved expenses. And at first there was talks of something like an eight week covered period, but within a few months there was updates, flexibility, updates, specifically saying that sole proprietors, meaning if you filed for a PPP loan with a schedule, C could use the entire amount 100% on owner’s compensation. Now that was really good news because there was a debate going on, basically on how do you show what approved expenses you’ve used the money for?
And all that got pushed aside then over the course of the next six months or so, things pretty much stayed the same. Anyone who wanted to apply who had a schedule C could apply, but they had to use specifically line 31, which was their net income. So throughout the course of 2020, anyone who got a PPP loan actually got a much smaller amount because that number, that correct calculation was based on net. Now, the reason I make that distinction is because in early 20, 21, they changed the rules yet again, specifically, they said that if you were filing with a schedule C, you could actually use line seven now, which was gross. Now there’d be clear that gross income is all the cash, all the checks, any money coming into your business that goes on that top line. That line seven, the big difference is because that line 31 had all those tax deductions, any expenses you were right in the off.
So all of a sudden people could now get a much larger PPP loan. Oh, and by the way, they could also sign up for a second round of PPP funding. Now, the really kind of sad part is they never retroactively made those funds available to people who ended up getting PPP one using line 31. They should have they didn’t. And that’s just the way it is right now. So moving ahead, the first six months in 2021, you had people not only being able to apply for PPP too, but you were also able to apply for PPP one, if you hadn’t gotten that yet. And of course, then get a second round of funding for PPP two. Okay. All of that’s old news. I just wanted to be clear that the rules have changed so many times that people were unsure. If they got the correct amount of money, how to quote unquote, pay themselves, what type of documentation would be necessary.
So let’s now dive in to how forgiveness is supposed to work and what is going to look like moving forward. Now the latest rule changes state that you can select between an eight to 24 week covered period. That means that based on the date, when you got the money, you can use it as fast as eight weeks or as long as 24 weeks. So you can spread it out. You can pay yourself any which way you want. However, I always recommend and still stand by a 10 week payment period. What I mean by that is they’re giving you 2.5 months worth of owner’s compensation based on your tax forms. So to me, it just makes complete sense to spread it out evenly. Over 10 weeks, people can easily divide by 10 and then that creates that necessary documentation that the SBA or even your lender has the right to ask for specifically, that documentation is in the form of bank statements, showing that the money went into one account and then you transferred it to a different account.
In fact, that actually creates duplicate documentation because you have the bank statements from the account where the money was deposited. And then you have the bank statements where you transfer the funds. If you want to dive into my best guidance on how to pay yourself, I will leave a link down below in the description. In addition to using 10 weeks, I also always recommended opening up a separate PPP account, something that’s dedicated just for those funds. And isn’t muddied up with other types of transactions or personal expenses. Now, of course, the forgiveness side of things, wasn’t simple either. They came out with an original form and some calculations and it was just confusing and long. Then they came out with what they called the easy form. And honestly, that form is pretty good, but then they came out with a more simplified form, the 35 0 8 S and they even revised that once as well now, to be clear, most lenders are not going to have you physically print out or send them that form or that PDF.
Instead they’ve spent tens of thousands, even probably millions of dollars, creating portals, where you could log in some of your information will pre-populate and you can simply click a couple buttons and apply for forgiveness, but not all lenders are even accepting forgiveness right now. And here in lies the problem, the SBA needs to get some of these loans off their plates. You know, they, they are still dealing with Eid Al and there are people who have not gotten their loans forgiven from 2020. Now we’re moving into 2021 and 2022. So they need to help streamline the process. So the new fast forgiveness portal through the SBA is designed to help. Most people apply directly for forgiveness. Also it’s designed to help the lenders. If they decide to use their own portals, do this batch uploading, taking the thousands of different loan, forgiveness applications that they’ve kind of put together and just send them all off instead of sending them individually or in small groups.
Also, some of you who got a second PPP loan might still be concerned about how do you show that like 25% loss, and this system is going to help you calculate that there’s going to be something called a COVID score. And if you elect to use it, they’re going to crunch some numbers and do some calculations behind the scenes to help approve that second PPP loan to be forgiven as well. So I got to say, there’s some pros and cons to this portal. Number one, like where was this portal a year ago, six months ago, three months ago. But putting that aside, these lenders have to decide if they just abandon their own portals. They’ve probably already spent money, like I mentioned, and just trust that the SBA is going to have a portal that works and is going to help process everything much quicker and more efficiently.
However, don’t forget that the SBA reserves like 90 days to review your application and the lender you get 60 days. So if you put that all together, that’s 150 days, half a year, almost of just waiting and wondering if you actually got the money forgiven. Therefore I recommend that you create a little folder, like in your email or on your desktop of all the information you’re going to need. Now, just to be clear, you may be able to apply without providing documentation, but if there’s any red flags, if there’s any questions, the SBA and the lender reserved the right to ask for the following documentation specifically, we’re talking about your tax returns, your full 10 40 return. That includes that schedule C you might as well just get that together. 20, 19, 20 20, have it saved in that little folder. Also, they’re going to ask for bank statements.
Now, again, if you do not have payroll, meaning a payroll service doing your payroll, the only way to show like where the money went could be an is through bank statements. Then again, they may never ask for them, but it’s a good idea to get those three month’s worth when you use the funds, print them out, or get them in PDF form and stick them in that same folder. Likewise, if you transferred the money from a business account to a personal account, go ahead and print those or get those PDF statements from that personal account together as well. All in all, I’ll try to help you out. I’ll put a little checklist down below in the description, just click the link and I’ll put all this information, the links of the forgiveness applications and everything all in one place, a few key takeaways. The SBA is opening its own PPP loan forgiveness portal.
Some might view this as like too little too late, but in reality, there was a big push to get the funds out there, especially those last few months, when you could still apply and be approved. And there are a ton of credit unions or maybe smaller lenders that just don’t have the ability to, you know, process efficiently all of these forgiveness applications and, and, and take these statements if they have to. So as a result, the SBA is, is finally, I guess, stepping up and opening up its own portal. Of course, it remains to be seen how well this portal actually works. Also your lender has to sort of opt into it. The lender may choose, especially some of the bigger lenders for you to use their portal. And yes, those were the original rules to begin with, apply for forgiveness for each PPP loan directly with the lender.
My recommendation is to defer to your lender, send them a secure message and email hop on the phone, be persistent. If they’re not getting back to you and ask them how you should go about applying for forgiveness. Just remember if you’re still on the fence, you do have time. In fact, you have up to 10 months after your covered period to apply for forgiveness. And in that 10 months, I’m sure you’re going to be able to get some clear direction from the lender and from the SBA. Hopefully. All right. It sounds like the SBA is trying to put the spotlight on the forgiveness process at this point. So let me know down in the comments, what questions you have about PPP loan forgiveness. I will be going live in my private Facebook group for a PPP forgiveness webinar. It is completely free. So if you want to check that out, feel free to join. Also, I am available through my website to book for a private one-on-one consultation. I’ve helped hundreds of people take a look at their documents and make sure everything looks the way it should, if there’s a problem, how they can get in touch with their lender. So if you are looking to book a call with me, you can do so directly through my official website. All right. If you’re new to the channel, please don’t forget to hit subscribe and ring that bell notification bell. All right. As always I’m Rich. And until next time.