At Estess CPAs, we have been answering many questions, such as; What records should I keep?   What do I need to be doing? 

Rest assured that if you engaged us to handle this for you, we will take care of everything that is needed with your financial institution.  We have not yet reached the time to submit the applications for forgiveness, as there is still talk of more changes to the system.  So being patient a little longer and making sure that we are keeping records in a safe place so that we are prepared when the time for forgiveness arrives is the best course of action right now.

The banks, where the forgiveness process begins, are still working on their systems to process the forgiveness applications.  So, nothing needs to be done right this minute.  As mentioned before….the 8 week forgiveness period moved from 8 to 24 weeks which should be advantageous to everyone.

When should we be prepared to submit the forgiveness application? 

The time to submit your application for forgiveness is when you have completely met the criteria for forgiveness, which typically means you have spent all the loan proceeds on your payroll.  At this point, that is the path of forgiveness with the least amount of resistance.  Once the application is submitted, we will typically know within 90 days if the application is accepted.

Please note, that contrary to what was first published and announced by the politicians, the amount of your EIDL advance “may” decrease your loan forgiveness.

So, let’s see if we can make this as quick as possible.

Here’s what do you need to know?

  • The covered period is 24 weeks.  But, if your loan was funded prior to June 5, 2020, you have the option of using the original 8 week period.
  • Eligible expenses for forgiveness:
    • Payroll Costs
      • Employee Compensation. (Gross Pay including tips, vacation, sick and family leave)
      • State and Local taxes on compensation. (Louisiana unemployment taxes)
      • For an independent contractor or sole proprietor, all of the above, plus net earnings from self-employment or similar compensation.
    • Non-Payroll Costs (contracts must have been in place as of 2/15/2020)
      • Rent (real and personal property)
      • Interest on mortgages  (real and personal property)
      • Utilities
  • Forgiveness Information
    • The forgiveness application is submitted to the bank where the loan was obtained.


When do you need to submit the application?  On or before the maturity date of the loan, including the end of the covered period.

    • The forgiveness amount may be in whole or part.  Even if your payroll was below the 60% threshold, you may still qualify for partial forgiveness.
    • Full-Time Equivalent (FTE) Requirements
      • 1 FTE equals an employee who works 40 hours a week.
      • The amount of forgiveness may be reduced if the level of FTEs is not restored by the measurement date, which has been extended to December 31, 2020.
      • Self-employed individuals with no payroll do not have to worry about FTEs.
      • There are 2 safe harbors that will also help you in maintaining your FTE level.
        • The borrower was able to document in good faith that they were unable to operate at the same level of business activity as before 2/15/2020 due to compliance issued by the government.
        • The borrower reduced its FTE employee levels after 2/15/2020, but then restored the FTE level prior to 12/31/2020

What documents do I need to maintain to support forgiveness?

      • Payroll reports to support both FTEs and Payroll expense amounts
            • Quarterly payroll reports
            • Payroll expense registers, included hours worked
            • Loan Documents
            • Utility Receipts
            • Payment receipts, canceled checks, or account statements

If you have engaged Estess CPAs, a detailed checklist will be provided of everything that needs to be assembled and we will create a PPP package to support the loan application and forgiveness process.  So that when and if it is ever needed, everything is in its place.

When it comes time to apply for forgiveness.  The steps to obtain forgiveness may work something like this: 

      • Once the funds are fully used for payroll, and you have reached an appropriate FTE/Salary level, maybe 75% of your starting FTE/salaries, the application will be submitted to your bank.
      • The bank then has 60 days to make a decision and submit the application to the SBA.
      • The SBA then has 90 days to remit the forgiveness amount to the bank.
      • The bank is then responsible to notify the borrower of the forgiveness amount, and also the amount of the first payment and due date if the loan is not forgiven in full.  At that time, you can choose to pay the remainder back or to keep balance in the form of a loan.

We all know that this has been a wild ride on the crazy train.  With politicians fighting for face time, and interim Final rules, then revisions to the final rules, and then interim final rules on the interim final rules.  OK, enough already.  Who is on first?  Nothing is done until it is done, so let’s wait and see if any changes are going to happen in the next few weeks.  I hope that it is all clarified in 30 days, or so, and then we can put our documents together and close this chapter.

Please feel free to share this with any of your business friends.  Many CPAs have shied away from getting involved in the PPP process.  I felt that it was necessary to be there for you and provide as much information as we could to help you through this crisis.  Please also let them know that we would love to work with them on a regular basis.  Helping them with their monthly accounting needs as well as payroll and income tax planning.

Until we meet again, stay safe, and I wish you well.

John Estess, CPA

Estess CPAs