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.