Paycheck Protection Program Forgiveness
May 1, 2020
By: Kris Braunberger
Loan Details and Forgiveness
Forgiveness of the loan is based on the employer maintaining or quickly rehiring employees and maintaining salary levels. Forgiveness will be reduced if full-time headcount declines, or if salaries and wages decrease within 8 weeks from the date of the issuance of the proceeds.
At least 75% of the forgiven amount must be used for payroll. Loan payments will also be deferred for six months. No collateral or personal guarantees are required. Neither the government nor lenders will charge small businesses any fees.
This loan has a maturity of 2 years and an interest rate of 1% for the debt which is not forgiven.
Documentation Needed to be Forgiven
The forgiveness of the loan does not constitute as taxable income. Documentation will be required to be submitted to the SBA in order to receive loan forgiveness. All loan applicants should fully learn the rules for required documentation.
The following will be required:
- Certification that the documentation provided is true and correct and the amount for which forgiveness is required was used to retain employees, and make interest, rent and utility payments,
- The employer will need to provide Form 941 and state quarterly tax reporting forms or the equivalent payroll processor records that correspond to the covered period,
- Evidence of business rent, mortgage interest payments or utility payments for loan proceeds used for these purposes,
- 2019 Form 1040 Schedule C, if reporting as an individual.
If you are considering taking out a loan through the Paycheck Protection Program or have already done so, don’t hesitate to give us a call. We would be happy to assist you and your business.