HOW TO GET FORGIVENESS OF YOUR PAYCHECK PROTECTION LOAN

Congratulations to those of you who were able to secure a loan through the Paycheck Protection Program. Now that your loan has been secured, proper steps must be taken to get the loan forgiven. 

Loans made through the PPP program can be forgiven in-part or in-full – meaning you may be obligated to repay 0-100% of the principal balance plus accrued interest on the loan if certain conditions are not satisfied.
 
MAXIMUM FORGIVENESS
To be considered for maximum forgiveness, you must meet all of the following conditions:

  • Use the loan in the first eight weeks from the day you received the funds in your bank account.

  •  At least 75% of the total loan amount must be used for eligible payroll expenses.

  •  No more than 25 percent of the loan amount can be used for other eligible expenses. The other eligible expenses are interest on a commercial mortgage incurred before February 15, 2020, as well as rent and utilities payments under agreements in effect also prior to February 15, 2020.  

PARTIAL FORGIVENESS
The following items could reduce the forgiveness amount or be excluded from forgiveness consideration:

  • Reducing the number of full-time employees during the eight-week period as compared to certain prior periods or decreasing the compensation for any employee making under $100,000 per year (annualized in 2019) by more than 25 percent of the employee’s salary for the most recent full quarter.  However, loan forgiveness will not be reduced to the extent the changes to salaries or reductions in full-time employment made between February 15, 2020 and April 26, 2020 are reversed by June 30, 2020.

  • Using funds for non-eligible expenses.

  • Having unused funds after the eight-week period.

  • Paying amounts to an independent contractor or sole proprietor (other than you as the borrower).

  • Providing compensation to employees whose principal place of residence is outside the United States.

 
You will be required to pay back the portion of the loan that is not forgiven. Payments will not be required on the remaining portion of the loan until after six months from the day the loan was first disbursed to you. It is important to note that during those six months interest will continue to accrue at one percent (1%) per year on the outstanding loan amount.  You will have two years from disbursement of the loan to repay the remaining principal and interest on the loan in full in accordance with the terms of your Note.  You may pay the loan off before two years without penalty.
 
WHAT SHOULD YOU DO NOW?

  • Keep accurate records and documentation of how you spend the loan funds. You will need to submit documentation and certify the expenses you paid with the loan over that eight-week period. You should consult with your lender to find out what documentation they will be requesting to support your expenses.

  • Do your best to pay out at least 75 percent of the loan for eligible payroll expenses over the eight-week period and use the remainder for other eligible expenses.

  • Toward the end of the eight-week period, you will need to reach out to your lender and fill out a forgiveness application.

If you have any additional questions on the Paycheck Protection Program please reach out to us.