The paycheck protection program was designed to help your small business during thepandemic. Not only has it allowed an influx of cash reserves for your business to helpkeep employees paid, but it is 100% forgivable if used properly.
What exactly is the PPP loan forgiveness?
The Paycheck Protection Program is a loan program that originated from theCoronavirus Aid, Relief, and Economic Security (CARES) Act.
This was originally a $350-billion program with the idea to provide American smallbusinesses with eight weeks of cash-flow assistance through 100 percent federallyguaranteed loans.
The program was expanded by the Paycheck Protection Program and Health CareEnhancement Act, adding $310 billion in funding.
Here is what you need to know to ensure your loan is forgiven:
First, most small businesses will find they do qualify for this program. Small businesses,sole proprietorships, independent contractors, and self-employed individuals are all eligible. Each of those categories will need to do a different request process but all ofthem can apply and qualify for the Paycheck Protection Program.
What do you need to know about this loan forgiveness?
You can get 100% of your loan forgiven if you meet certain criteria.
The funds can be used for :
1.Payrolls. For example: salary, wage, vacation, parental, family, medical or sickleave, health benefits.
Most of the expenses that fall under those categories are eligible for forgiveness. Of course, there are some conditions you will need to follow.
What are the conditions to get your loan forgiveness?
1.Eligible expenses are those that are incurred during the allotted time followingyour approval. For example, all the payroll you did during the 24 weeks isincluded.
2.Make sure that at least 60% of your loan is going to be used for payroll costs.Payments to independent contractors should not be included in the payroll costs,for example.
3.You must maintain the number of employees on your payroll.
4.You must maintain at least 75% of the total salary. This requirement counts forevery employee that did not receive more than $100,000 in 2019.
If you reduce your headcount or reduce the amount you pay to your workers, theforgiveness will not be for the total amount of the loan.
What happens if I am not approved for forgiveness?
You will be able to provide additional documents so your case can be reevaluated.
Otherwise, your outstanding balance will continue to accrue interest at 1%, for theremainder of the 5-year period.
How to apply for loan forgiveness?
In order to get forgiveness, you will need to complete a Forgiveness Application formand submit it.
If you are thinking about applying for a process like this one, make sure to understandall the requirements and conditions. It is important to spend your time on things that areactually going to be helpful for your business and there might be some that actuallydon’t work in these cases.
If you have questions or need assistance, Diverse Community Partners, Inc. is availableto assist you with your PPP forgiveness process. Call us today at (980) 202-7283.