PPP Loan Forgiveness FAQ

Updated 12.16.20

About Upside Financial & PPP Advisor Pro

What is Upside Financial?

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Upside Financial exists to provide PPP borrowers the support they need to navigate the confusing aspects of PPP forgiveness.

What is PPP Advisor Pro and how does it work? 

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PPP Advisor Pro is Upside Financial’s flagship product. PPP Advisor Pro guides borrower’s through a simple 3-step process to achieve maximum loan forgiveness based on how that borrower used their loan.

1. It starts with setting up an account and answering a few questions about the business and PPP loan on www.upsidefinancial.com.
2. Then, clients meet one-on-one with a trusted PPP Advisor to discuss the application and answer any questions.
3. The last step is a final review by a CPA before the application is handed back to the borrower to submit to through their lender’s forgiveness portal.

The service is available for a low, one-time fee of $499, regardless of loan size or complexity. 

Who can use PPP Advisor Pro? 

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Anyone who has received a PPP loan from the SBA will benefit from PPP Advisor Pro. PPP Advisor Pro is the perfect solution for borrowers who want to maximize their forgiveness and avoid hidden costs, hourly rates and billable hours.

Why should I use PPP Advisor Pro? 

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PPP Advisor Pro by Upside Financial can save you time, money, and effort on your PPP Loan Forgiveness Application.

Why does PPP Advisor Pro exist? 

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To take the confusion out of the Paycheck Protection Program (PPP) for both borrowers and lenders. The PPP forgiveness process has proven to be complex and daunting for everyone: complicated rules, multiple forms (there are now three different forms: 3508, 3508EZ, 3508S), potential for second loans and the SBA is still slow to approve forgiveness. While some businesses have the resources and grit to stay on top of the forgiveness complexity, the majority of small businesses with PPP loans have limited access to the support they need to maximize their forgiveness.

Where can I learn more about Upside Financial and PPP Advisor Pro?

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You can learn more about Upside Financial and PPP Advisor Pro at www.upsidefinancial.com

About Forgiveness

How do I get loan forgiveness for a PPP Loan?

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Borrowers will have their loans forgiven if they used the money for designated expenses. The amount of forgiveness is equal to the total amount of payments for payroll, mortgage interest, rent, and utilities. At least 60% of the loan amount may be used for payroll costs and no more than 40% of the loan amount may be for non-payroll costs.

What can be forgiven?

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Payments made during the 8 or 24 week covered period may be used for:

1. Payroll (60% minimum) 
2. Rent for the office
3. Mortgage interest for the office
4. Utilities

Using the provided funds for rent, mortgage and utilities is capped at only 40% of the forgiveness amount.

What is the Covered Period?

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The covered period is the period that starts when your PPP loan was disbursed to your bank account through 8 weeks or 24 weeks depending on which option you choose to use.

The Covered Period is either:

1. The 24-week (168-day) period beginning on the PPP Loan Disbursement Date, or
2. The 8-week (56-day) period beginning on the PPP Loan Disbursement Date if you received your PPP loan before June 5, 2020, and elect to use an eight-week (56-day) Covered Period.
3. The Covered Period cannot extend beyond December 31, 2020. 

All borrowers, regardless of when you received your loan are eligible to use the loan over a 24-week period.

When does the Covered Period begin?

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The covered period begins once the funds are transferred to your bank account. You cannot change or delay the start of your 8-week or 24-week period. The SBA automatically begins the clock as soon as the loan proceeds transfer to your account.

What is the Alternative Payroll Covered Period?

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For administrative purposes, companies that have a biweekly (or more frequent) payroll schedule may elect to have their covered period begin on the first day of their first pay period after receiving their PPP funding.

Example: A company’s loan is disbursed on May 1st, 2020. Their first pay period after receiving the loan falls on May 5th, 2020. This company can elect to have their covered period begin on May 5th, 2020, to line up with their existing payroll schedule.

What is the difference between the 8 and 24 week Covered Period?

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The SBA expanded the Covered Period to 24 weeks from 8 weeks on June 5th, 2020. Any loan made after June 5th, 2020 must use the 24 week period. Loans made before June 5th can elect to use an eight-week OR 24-week period.

When do I need to decide to use the 8 or 24 week Covered Period?  

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You can only elect to use an 8 week Covered Period if you received your PPP loan before June 5th, 2020. Otherwise you will automatically be granted the 24 week Covered Period. 

If you received your loan before June 5th and have the option to elect for an 8 week Covered Period, you do not have to decide immediately on which time frame you’ll use. Our Upside Advisors can help you determine the best option for your business. If your business is not harmed by waiting, you can wait the 24 weeks and determine after the time has passed which Covered Period is most beneficial for your business needs and allows you to use all or the majority of your PPP Loan.

Is Loan Forgiveness Automatic?

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No. Each unique loan must apply for Loan Forgiveness. If you receive two PPP loans for two separate businesses, you must apply separately for both loans to be forgiven.

Applying for Forgiveness

How do I apply for forgiveness? 

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You will need to submit a PPP loan forgiveness application package to your lender. There are three forgiveness applications, created by the SBA. As the borrower, it is your responsibility to determine which application is right for your business. The three applications are:

1. 3508
2. 3508EZ
3. 3508S

All of these applications are accessible for download on the SBA’s website. 

You will need to provide an application with fully completed calculations and accompanying documents to your lender. You will be held accountable for any and all calculations you complete on and may be audited according to your answers. It is incredibly important that your form is completely accurate. 

(Pro Tip: Upside Financial will help customers determine which application is right for them AND review all supporting documents and calculations for accuracy.)

How do I decide which form I should use, 3508, 3508EZ, 3508S?

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If you choose to use Upside Advisor Pro, we will decide all of that for you.

You may be eligible to use form 3508EZ if you can answer “Yes” to one of the following statements:

1. Are self-employed and have no employees; or
2. Did not reduce the salaries or wages of your employees by more than 25%, and did not reduce the number or hours of your employees; or
3. Experienced reductions in business activity as a result of health directives related to COVID-19, and did not reduce the salaries or wages of your employees by more than 25%.

You are eligible to use form 3508S if your loan is $50,000 or less. Please note that while you do not need to provide a breakdown of how you spent your loan within this application, it still requires the exact same documentation as the 3508EZ application.

Otherwise you will have to use Form 3508.

What documentation should I submit in order to receive forgiveness?

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These are the documents we believe you will need to collect and provide with your PPP forgiveness application. Your lender may have additional requirements:

1. Documents verifying the number of full-time equivalent employees on payroll and their pay rates, for the periods used to verify you met the staffing and pay requirements;
2. Payroll reports from your payroll provider;
3. Payroll tax filings (e.g., Form 941, 2019 Schedule C);
4. Income, payroll, and unemployment insurance filings from your state;
5. Documents verifying any retirement and health insurance contributions; and
6. Documents verifying your eligible interest, rent, and utility payments (canceled checks, payment receipts, account statements).

Good record keeping and bookkeeping will be critical for getting your loan forgiven—you’ll need to keep track of eligible expenses and their accompanying documentation over the eight or twenty four week period. Your lender will likely require these documents in digital format, so take the time to scan any paper documents and keep backups of your digital records.

When can I apply for forgiveness?

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All borrowers have up to 10 months after the end date of your covered, or alternative covered, period to submit your application for forgiveness. If all funds have been used before your covered period ends, you are able to submit your forgiveness application early, before the end of your covered period.

Be mindful that if you do not apply for forgiveness, your loan WILL NOT automatically be converted into a grant, and your business will be responsible for repayment of your loan in accordance with the loan terms.

Can I apply for Loan Forgiveness early?

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Yes! If all of your PPP funds have been used before your covered period ends, you can submit your forgiveness application early. Once you are ready to complete your loan forgiveness application, we encourage you to do so as soon as possible. Much like when the loans were being disbursed, we fully expect lenders to have a backlog of applications when they begin accepting them. The earlier you are able to submit your application to your lender, the better.

PPP Loan Repayment

Is there a payment deferral period for a PPP Loan?

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You will not have to make any payments for ten months following the end date of your covered period. There is no prepayment penalty

Is a PPP loan taxable?

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Any amount of loan forgiven as part of the PPP is excluded from gross income, and, as such, is not taxable. The CARES Act and the SBA guidance is clear that payroll costs include state and local payroll taxes paid (e.g. state unemployment taxes), but does not include the employer-paid portion of federal payroll taxes known as FICA (e.g. social security and medicare payroll taxes).

What is the Paycheck Protection Program Flexibility Act?

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The PPP Flexibility Act allows for a modification of the covered period in both time and authorization of spending.

1. Extends the Covered Period: The covered period begins on the date the loan is disbursed into your bank account and ends 24 weeks (168 days) later, or Dec. 31, 2020, whichever occurs first. If you received the PPP loan before June 5, 2020 (the date that the Flexibility Act was put into effect) you may choose to use either the eight-week or 24-week covered period.
2. Loan Forgiveness: The Flexibility Act amended the 75/25 rule to make it now 60/40, meaning that no more than 40% of the borrowers loan could be used for non-payroll costs and not less than 60% of the loan could be used for payroll costs.
3. FTE/Hourly Wage re-Hire: This clause extends the time a borrower can qualify for bringing their FTE count back to pre-pandemic levels. Now borrowers have until Dec. 31, 2020 to fully restore FTEs.

What happens if I’m not approved for Loan Forgiveness?

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If you have not abided by the SBA’s policies and you find yourself not eligible for Loan Forgiveness, your outstanding balance (all funds that were not deemed forgivable) will continue to accrue interest at 1%, for the remainder of the 5-year period.

There is no prepayment penalty; you can pay off the outstanding balance at any time without any additional penalty or fees.

Allocating the Loan

What can a PPP Loan be used for?

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Loan proceeds should be used for payroll, benefits, taxes on compensation, mortgage interest, rent, and utilities. At least 60% of the total should be spent on payroll.

What happens if I use a PPP Loan for funds that do not qualify?

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If you use PPP funds for any other valid business purposes, the SBA will direct you to repay those amounts. If you knowingly use the funds for non-business purposes, you will be subject to additional liability, such as charges for fraud.

Are there certain aspects of this loan that pertain only to nonprofit organizations?

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No, there are no specifics that pertain only to nonprofit organizations.

Upside Financial Partners & Programs

Who is Hannah Smolinski?

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Hannah Smolinski is the CEO and Founder of The Clara CFO Group and Upside Financial’s Senior Advisor. In her career as a CPA, Hannah worked for one of the world’s largest accounting firms and saw how large companies have access to incredible teams of financial experts and saw an opportunity to bring those same services to small businesses. Clara CFO Group provides financial clarity for growing small businesses, even more critical now with the complex Payment Protection Program.

Does Hannah have special expertise in PPP forgiveness? 

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As CEO and Founder of The Clara CFO Group, Hannah has more gamefilm on small business owners’ financial future mindset than most. Clara CFO Group has kept a unique pulse on the Payment Protection Program, The CARES Act, the Forgiveness Application Process, and everything in between. As Senior Advisor, Hannah brings her CPA expertise and experience guiding small business owners’ financial futures to support Upside Financial’s mission.

What is Hannah’s role in Upside Financial?

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Hannah is a powerplayer in the small business financial services space. Hannah is positioned as an expert in PPP loans and provides real-time financial guidance to her highly-engaged SMB audience:

- Nearly 15,000k YouTube subscribers, with upward of 500k viral video views
- 7,000k newsletter subscribers
- 100+ SMB specific financial resources
- Over 400k businesses reached

Why does Upside Financial need a Senior Advisor? 

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We thrive on feedback. To offer our clients the highest quality support and guidance we partner with financial experts who provide counsel and advice on product enhancements and the ever-changing rules and processes for loan forgiveness.

Is there a PPP Advisor Pro Referral Program? 

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Yes, members of our Referral Program earn $25 for every PPP Advisor Pro plan purchased using their unique affiliate link for the first 25 referrals, and graduate to $50 for every PPP Advisor Pro Plan purchased using their unique affiliate link for the next 50 referrals. If you are interested in referring PPP borrowers to purchase a PPP Advisor Pro plan, please register at: www.upsidefinancial.com/referral

Who can join the PPP Advisor Pro Referral Program?

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If you have a network of PPP borrowers who are stressed out by PPP forgiveness, the PPP Advisor Pro Referral Program is for you.

Applying for a New PPP Loan as of 2021

I heard there was more PPP Funding. Is the SBA accepting applications for new PPP loans?

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Yes! As of 1/6/2020, the US Federal Government has allocated an additional $284 million in funding for the Paycheck Protection Program (PPP). All potential borrowers must apply for a PPP loan through the bank or lender of their choice.

The SBA began accepting applications for the new round of funding on 1/11/2020. 

Am I eligible to apply for a PPP Loan in the latest round of funding?

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The following entities affected by Coronavirus (COVID-19) may be eligible:

  • Any small business that meets the SBA’s size standards - either the industry based sized standard, 500 employees or less, or the alternative size standard.
  • The alternative size standard is: a business concern may qualify as a small business concern if it, together with any affiliates: (1) has a maximum tangible net worth of not more than $15 million; and (2) the average net income after Federal income taxes (excluding any carry-over losses) for the two full fiscal years before the date of application is not more than $5 million.
  • Sole proprietors, independent contractors, and self-employed persons
  • Any business with a NAICS Code that begins with 72 (Accommodations and Food Services) that has more than one physical location and employs less than 500 per location
  • Any business, 501(c)(3) non-profit organization, 501(c)(19) veterans organization, or Tribal business concern (sec. 31(b)(2)(C) of the Small Business Act) with the greater of:
  • 500 employees, or
  • That meets the SBA industry size standard if more than 500

I already have a PPP Loan. Can I apply for another?

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Yes! The most recent round of funding is open to new applicants as well as borrowers with existing PPP Loans. Of note, borrowers applying for a second PPP loan (second draw loans) have additional requirements needing to be met. 

A borrower is generally eligible for a Second Draw PPP Loan if the borrower:

1. Previously received a First Draw PPP Loan and will or has used the full amount only for authorized uses
2. Has no more than 300 employees
3. Can demonstrate, at minimum, a 25% reduction in gross receipts between comparable quarters in 2019 and 2020.

What is the deadline for applying for a PPP Loan?

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The new deadline for borrowers to apply for a PPP loan is March 31st, 2021. 

What can PPP funding be used for?

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PPP Loans are to be used to help businesses retain their staff and pay their employees. While this is what loans should be predominantly used for, a minimum of 60% must be used towards payroll, the SBA has included additional uses for the loan in the newest round of funding. 

Payments made during the 8 or 24 week period may be used for: 

1. Payroll (60% minimum) 
2. Rent for the office
3. Mortgage interest for the office
4. Utilities

New loan uses include: 

5. Covered operational expenses
6. Covered property damage
7. Covered supplier costs
8. Covered worked protection expenditures

Using the provided funds for rent, mortgage interest, utilities and the additional approved loan purposes is capped at only 40% of the forgiveness amount.

Where can I find the updated PPP Application?

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Updated PPP Applications live on the SBA website. Below are links to both the first and second draw applications:

PPP & Other Assistance Programs

Am I able to receive a PPP Loan and collect unemployment?

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The CARES Act not only provides relief for small business owners through loans but also allows self-employed people, independent contractors, and part-time workers to collect unemployment benefits. You cannot receive both a PPP loan and unemployment assistance at the same time.

What is the difference between a PPP Loan and the Economic Injury Disaster Loan?

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The Economic Injury Disaster Loan Program (EIDL) can provide up to $2 million of financial assistance (actual loan amounts are based on amount of economic injury) to small businesses or private, non-profit organizations that suffer substantial economic injury as a result of the declared disaster, regardless of whether the applicant sustained physical damage.

1. It can be used for a slightly wider amount of obligations than the PPP.
2. You can apply for both—but they can’t be used for the same obligations.

Can I receive a PPP Loan and use the Employee Retention Credit?

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No, if you receive the Employee Retention Credit, you may not receive a PPP loan and no payroll tax deferral is permitted if you receive PPP loan forgiveness.