- 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 headcounts and pay levels:
The SBA says employers won’t get the fullest loan forgiveness if they:
- 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.