What is PPP loan forgiveness program?

Answer 1

The Paycheck Protection Program (PPP) loan is an emergency lending program launched by SBA overseeing $350 billion and $310 (in second round) in loans for small businesses impacted by the coronavirus outbreak.

PPP Loan Forgiveness - Up to 100 percent of a Paycheck Protection Program loan is forgivable and this is the biggest advantage of this PPP loan program for small business owners. But just because the loan is eligible for loan forgiveness doesn’t mean all can get the benefits of this forgiveness scheme. There are strict regulations on what qualifies for loan forgiveness—and as a small business owner, it’s important to understand that if you do not fulfill the required conditions of this forgiveness scheme, you will not get the benefit of forgiveness.

In order to qualify the forgiveness program, you need to check the current Paycheck Protection Plan guidelines. There are four expense categories that qualify for loan forgiveness:

• Employees Payroll costs (including wages, salaries, commissions, group healthcare benefits, insurance premiums, payroll taxes etc.)

• Mortgage interest

• Rent

• Utilities

• You can get loan forgiveness under these expense categories, but you need to follow certain strict guidelines in order to secure the PPP Loan forgiveness, check these guidelines below -

• You should keep the salary structure consistent for all employees. If you reduce the salary levels by more than 25 percent for employees making $100,000 or less, you will get the forgiveness amount reduced.

• You need to rehire an employee until June 30, if you laid-off or furloughed employees. So, maintain the numbers of your employees to per-pandemic levels.

• if you want to qualify for PPP loan forgiveness, you’ll need to spend the balance amount on forgivable expenses over that eight-week period from the loan disbursal.

• 75% of the loan amount must be used for payroll costs only. Only 25% can be used on other approved non-payroll costs