small business owners have already applied for a Paycheck Protection Program
(PPP) loan. The PPP was created as a way for businesses to be able to keep employees
on payroll. Some borrowers have already received their funding. Although you
may have already received your PPP loan, there are still some vital
considerations to focus on. These will help borrowers maximize on the amount of
loan forgiveness received.
actions borrowers take now will impact the amount of possible loan forgiveness
and it is crucial to begin the planning process immediately.
Much of the Loan Is Forgiven?
to the SBA, loans can be forgiven if employees remain on payroll during the
eight-week period after the loan is funded. The money can also be used to cover
specific business-related expenses. Please note that the actual amount that is forgiven
will vary for each organization.
have put together a few helpful tips to guide you having the best chance to achieve
complete PPP loan forgiveness.
us recap what expenses are covered under the Paycheck Protection Program:
Employee payroll expenses
Payments of interest on mortgage obligations
Interest on other debt obligations that were
incurred before the covered period.
must spend these loan proceeds by eight weeks after receipt of funds.
on these restrictions, some lenders have suggested that borrowers have a separate
bank account to ease on expense tracking. This will also make it easier to
identify the loan proceeds that have been properly used and qualify for
is important to understand that at least 75% of the loan must be designated to payroll.
Although it is unclear what the repercussions will be for not meeting this
requirement, it is possible it could lead to the loan not being forgiven or
your PPP loan is funded, an eight-week time frame begins for tracking eligible disbursements
that may lead to partial or complete forgiveness of the Paycheck Protection
Program loan. Please note this eight-week period begins at date of funding.
Records are required to track and prove expenses such as payroll forms, tax
forms, invoices, receipts, and banking records.
loan funding is only the first step to take in making your business operations
run smoothly during these unprecedented times. Businesses should prepare now to
get the most value out of their loan forgiveness. Early actions will lead to
the most forgiveness.
As we are learning to navigate through these times of uncertainty
and adjusting to our new normal, we here are at The Foresight
Companies want to be your go-to source for all topics
related to your business operations.