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Your Paycheck Protection Program Loan may be eligible for forgiveness by the Small Business Administration (SBA) under certain circumstances. This is one of the key attractions of this program but we want you to be aware of the eligibility guidelines and records retention procedures that you must follow so that your loan can be converted into a grant.
Use the PPP funds only for eligible uses
- At least 75% of the loan amount must go towards payroll costs (capped at $100,000 per employee) and all employees must be kept on the payroll or rehired by June 30, 2020. Eligible payroll costs consist of all compensation, tips, payment for leaves, healthcare and retirement benefits, and relative payroll taxes.
- The remaining 25% can be used on other operating costs that were in effect before February 15, 2020, such as rent, utilities, and mortgage interest. Principal payments and rent payments made to a real estate holding company are not eligible.
Work with the Foresight accounting team to determine the forgivable amount
- Having the loan forgiven requires properly documenting the use and allocation of the funds. It is recommended that you segregate the funds and take steps to ensure that proper accounting mechanisms are in place.
- The amount of the forgiven loan will be excluded from gross income and is not treated as taxable income.
Submit a request for loan forgiveness to your lender after the 8-Week Period
- Maintain cancelled checks, receipts, transcripts of accounts, payroll records, invoices and utility bills.
- Provide documentation to verify the number of full-time employees and their pay rates.
- Provide documentation to prove expenditures on eligible mortgages, leases, and utility payments.
- The lender is required to make the forgiveness determination within a 60-day period after the application is submitted.
If your loan is not completely forgiven:
- The total amount forgiven will be decreased if full-time headcount declines or if salaries and wages decrease.
- Any unforgiven portion will have a 1% interest rate and be due within two years of the date the loan proceeds were received.
For more detailed information about the PPP, please visit the SBA’s Coronavirus (COVID-19) Small Business Guidance and Loan Resources Website.
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.
Please visit our COVID-19 new Business Operations Resource Center frequently as we continue to update as changes are occurring.
If you have any questions or concerns please do not hesitate to pick up the phone and give one of us a call at 1-800-426-0165.
*Please note that as information is updated and modified, terms and conditions are subject to change.