How Does PPP Loan Forgiveness Work?
PPP Loan Forgiveness
As part of nationwide financial relief efforts during the COVID-19 crises, the U.S. government is offering a Paycheck Protection Program (PPP) for small business owners to allow them to continue to pay their employees.
At Paul Anderson CPA, we want to make sure that if you qualify for the PPP, that you understand exactly what you need to do to apply and that you receive your loan. Learn the details you need here.
The Required Uses for PPP Loan Funds
First, it’s important to know that the PPP loan terms are the same for everyone. Here are the requirements for the PPP loan:
- The loan is used to cover only payroll costs, mortgage interest, and rent and utility costs during an 8-week period after the loan is given
- The number of employees and the compensation levels remains the same
Payroll costs are capped at $100,000 for each employee’s total annual income. Loan payments will be deferred for 6 months.
Who Qualifies for PPP Loan Forgiveness?
All businesses including nonprofits, independent contractors, self-employed individuals, veteran organizations, and sole proprietorships that have 500 or fewer employees qualify for the PPP loan forgiveness.
Businesses in certain industries can have over 500 employees if they meet the Small Business Administration’s employee-based size standards for those industries. Read more information about these standards here.
When and How Do I Apply?
The applications are open for the PPP. Since April 3, 2020, small businesses and sole proprietorships have been able to apply for and receive loans for covering payroll costs and other expenses through existing Small Business Administration (SBA) lenders.
Since April 10, 2020, applications have been open for independent contractors and self-employed individuals. Other regulated lenders not of the SBA will be able to provide loans as soon as they are approved and enrolled in the program.
Where to apply: You can apply for the PPP loan through any existing SBA lenders, which you can find here in your area. You can also apply through any federally insured depository institution, federally insured credit union, and any participating Farm credit system institution.
If you’re unsure if your local lender is taking part in the Payroll Protection Program, call them and ask. For more information about the Payroll Protection Program, visit this page.
How Do I Get Started with the Payroll Protection Program?
To apply for a loan, complete this application and submit it with the required documents to an approved lender by June 30, 2020.
Have any questions about the PPP Loan Forgiveness program and applying for a loan? Get in touch with Paul Anderson CPA today!