Forgiveness Application: Documentation Required

Sole Proprietorships with No Employees

Payroll Documentation

• 2019 Schedule C or F
• Bank Statement from February of 2020

NOTE: Separate payments for health insurance, retirement, or state or local taxes are NOT eligible for additional loan forgiveness.

Non-Payroll Documentation
(If any other eligible expenses are being used to attain 100% forgiveness)

• Business mortgage interest payments
  • Copy of lender amortization schedule and receipts or cancelled checks verifying eligible payments from the Covered Period;
    OR
  • Lender account statements from February 2020 and the months of the Covered Period through the month after the end of the Covered Period verifying interest amounts and eligible payments.

• Business rent or lease payments
  • Copy of current lease agreements and receipts or canceled checks verifying eligible payments from the Covered Period;
    OR
  • Lessor account statements from February 2020 and from the Covered Period through the one month after the Covered Period verifying eligible payments.

• Business utility payments
• Copy of invoices from February 2020 and those paid during the Covered Period and receipts of cancelled checks or account statements verifying those eligible payments.

Entities & Sole Proprietorships With Employees

Payroll Documentation:

• Payroll report prepared by 3^rd party
• Payment receipts, cancelled checks, or account statements documenting the amount of any employer contributions to employee health insurance and retirement plans that the borrower included in the forgiveness amount (PPP Schedule A, lines (6) and (7)).
• Tax forms – quarterly 941 report + State unemployment tax filing (filed or will be reported)

OR

• Internally prepared payroll information
• Bank statements for the reporting period documenting the amount of cash compensation paid to employees with expenses clearly notated on statements (Highlighted).
• Schedule C or F (if a sole prop and have employees)
• Tax forms – quarterly 941 report + State unemployment tax filing (filed or will be reported)
• Payment receipts, cancelled checks, or account statements documenting the amount of any employer contributions to employee health insurance and retirement plans that the borrower included in the forgiveness amount (PPP Schedule A, lines (6) and (7)).

Non-Payroll documentation:
(if any other eligible expenses are being used to attain 100% forgiveness)

• Business mortgage interest payments:
  • Copy of lender amortization schedule and receipts or cancelled checks verifying eligible payments from the Covered Period
    OR
  • Lender account statements from February 2020 and the months of the Covered Period through the month after the end of the Covered Period verifying interest amounts and eligible payments.

• Business rent or lease payments:
  • Copy of current lease agreements and receipts or canceled checks verifying eligible payments from the Covered Period;
    OR
  • Lessor account statements from February 2020 and from the Covered Period through the one month after the Covered Period verifying eligible payments.

• Business utility payments:
  • Copy of invoices from February 2020 and those paid during the Covered Period and receipts of cancelled checks or account statements verifying those eligible payments.

While CMCU may have some of these documents on file, the SBA requires you, as the borrower, to supply the documents to validate your expenses.

⁠Notes on payroll documents:

Payroll Reports should include all periods overlapping the 24-week covered period (or 8-weeks if selected), and show figures for each of the following eligible costs:

• Cash compensation;
• Employer contributions for employee health insurance;
• Employer contributions to employee retirement plans; and 
• Employer state and local taxes assessed on employee compensation.

It is preferred if the report shows separate cash compensation figures for: 

• Employees who received compensation at an annualized rate <=$100,000 for all pay periods in 2019; and 
• Employees who received compensation at an annualized rate >$100,000 for all pay periods in 2019
  [For Form 3508EZ, there is no need to separate employees by 2019 compensation level.]

This detail helps Central MN Credit Union validate the line item figures shown on the forgiveness application forms.  

Cash Compensation:

• Eligible cash compensation includes: gross salary, gross wages, gross tips, gross commissions, paid leave (vacation, family, medical or sick leave), and allowances for dismissal or separation.  This may include bonus; hazard pay; and salaries to furloughed employees.
• Do not include compensation in excess of an annual salary of $100,000 annualized, as prorated for the covered period.  Therefore, the payroll schedule should show no employee with more than $46,154 in compensation if selecting the 24-week period (or $15,385 for the 8-week period, if eligible and selected).
• Do not include payments to independent contractors, or compensation to employees whose principal place of residence is outside the US; or qualified sick and family leave wages for which a credit is allowed under sections 7001 and 7003 of the Families First Coronavirus Response Act.

Employer-paid state and local taxes assessed on employee compensation:

• Payroll reports should also show total amount paid by the borrower for employer state and local taxes assessed on employee compensation (e.g., SUI - state unemployment insurance tax).

⁠Note on full-time equivalency (FTE):

FTE counts both full-time (FT) and part-time (PT) employees. An FT employee is counted as 1.0 FTE, and a PT employee is counted by average number of hours per week divided by 40. For example, a PT employee working 32 hours would count as 0.8 FTE. SBA also offers a simplified method that assigns all PT employees as 0.5, if that is preferable.