If you have received a PPP loan, you need to track specific activities and transactions in order to ensure loan forgiveness.
Loan forgiveness application will start being due by June 30th 2020. Your date is 24 weeks from when your PPP loan funded unless you choose to use the original 8 week period. It is critical that you have documentation in place to satisfy these requirements. The application will be provided by your bank. Please note the guidelines below are subject to change based on additional legislation or clarification of existing legislation.
What you need to know
- Make sure your business truly qualifies for and needs PPP Funding. If you received a loan for under $2M, you are covered under the safe harbor rule and your loan was deemed necessary.
- You must use at least 60% for payroll expenses. You must pay employees at current compensation levels without reductions to wages or headcount and satisfy employee head count requirements. Independent contractors/business owners can pay themselves 8/52 of earnings.
- Use the remaining 40% for other qualified expenses. These can include mortgage interest, rent or lease payments, utilities and transportation costs for contracts in place prior to Feb 15, 2020.
- Keep detailed records. This includes documentation verifying FTE employees on payroll and their pay rates, payment verification for covered expenses, and any other covered expenses. You will be required to certify the documentation is all true and accurate.
- If you are not approved for 100% forgiveness, you have 2 years to pay it off at 1% with an initial 6-month deferment period.