Small business owners who received a loan through the federal government’s Paycheck Protection Program can now apply for loan forgiveness, the U.S. Small Business Administration recently announced.
Funds disbursed through the PPP can be forgiven so long as 75% of the money is spent on payroll and the remainder is used for rent, utilities, and mortgage interest. However, the funds must be used in the eight weeks following the day the loan was disbursed.
To apply for forgiveness, the borrower must complete the application and submit it to the lender that serviced the PPP loan.
The components of the application include the PPP loan forgiveness calculation form, PPP Schedule A and the PPP Schedule A Worksheet. The form and instructions include several measures to reduce compliance burdens and simplify the process for borrowers, including:
• Options for borrowers to calculate payroll costs using an “alternative payroll covered period” that aligns with borrowers’ regular payroll cycles.
• Flexibility to include eligible payroll and non-payroll expenses paid or incurred during the eight-week period after receiving their PPP loan.
• Step-by-step instructions on how to perform the calculations required by the CARES Act to confirm eligibility for loan forgiveness.
• Borrower-friendly implementation of statutory exemptions from loan forgiveness reduction based on rehiring by June 30.
• Addition of a new exemption from the loan forgiveness reduction for borrowers who have made a good-faith, written offer to rehire workers that was declined.
The application also includes a fourth “Borrower Demographic Information” form, which is an optional part of the application aimed at collecting veteran, gender, race and ethnicity information for reporting purposes.
The BizTimes recently hosted a webinar in which experts detailed best practices and strategies for managing PPP funds and how to achieve loan forgiveness.
Click here for the PPP forgiveness application and instructions.
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