PPP (Paycheck Protection Program) is designed to provide incentives for small businesses. This scheme offers significant support for small businesses to survive during the pandemic.
A business can benefit from a 1% interest on a loan paid in 2 years, with no additional pre-payment or borrower fees. The PPP loans can be forgiven either fully or partially, depending on what you do with the amount during the 24 hours after receiving it. Here is how to get PPP loan forgiveness:
Getting PPP Loan Forgiveness
Check the loan’s applicability for forgiveness. Your PPP loan will be forgiven if you spend 100% of the revenue on mortgage interest, payroll, utilities, and rent in 8 weeks after getting the loan. You must have spent a minimum of 75% on payroll and 25% on rent and utilities.
How Loan Forgiveness Can Reduce
If over 25% of the loan is used on non-payroll expenses, the maximum rebate amount will equal your payroll cost divided by .75.
For getting 100% forgiveness, you have to either:
- Rehire and undo every wage reduction before the PPP covered period on 30th June, or
- Maintain the payroll identical to before 15th Feb 2020
Document Every Loan Expense
Just mentioning the expenses won’t be enough to proceed, so it is recommended to document your expenses after getting the loan. You will need:
- The documents to validate full-time employees’ numbers on payroll along with their wages paid via the loan.
- The documents regarding the utilities, rent, and mortgage interest payment.
Follow the Specific Guidelines Laid by Your Lender
Even though SBA monitors the PPP loan scheme, you need to follow your loan lender’s instructions. The lender can make further requests like asking for additional documents or the usage of specific channels.
Thus, you need to ensure that you understand and follow the guidelines laid by your lender.
Getting the right small business insurance can also help your business survive during the pandemic. Contact the experts at PMC Insurance Group for assistance with all your insurance needs.
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