Many business owners have questions about the Paycheck Protection Program (PPP). One of the biggest question is how to apply for loan forgiveness. According to this article from the Society for Human Resource Management says you should keep these things in mind:The basics:
- The loan proceeds help cover payroll costs, as well as most mortgage interest, rent, and utility costs over the eight-week period after the loan is given.
- This helps businesses maintain employee headcount and pay levels during this crisis.
The loan can also help with:
- Salary, wages, commissions, and tips—up to $100,000 annualized for each employee.
- Employee benefits, including paid leave, severance pay, insurance premiums, and retirement benefit.
- State and local taxes assessed on pay.
- Payroll costs for sole proprietors and independent contractors include wages, commissions, income or net earnings from self-employment (up to $100,000 annualized).
Employee head-counts and pay levels:
- Decreases full-time employee headcount.
- Cuts salaries and wages by more than 25 percent for any employee who made less than $100,000 (annualized) during all pay periods in 2019.
It’s important to keep track of expenses during the the eight-week period after the loan is funded. If you spend more than 25% of the loan on non-payroll expenses, you risk getting less of the loan forgiven. You’ll need to submit a forgiveness request to your lender with documents to verify the number of full-time employees, pay rates, and payments on eligible expenses. If you want more information, read the full article here. If you need more help or information about PPP loans, our SBA team would love to help you.