The Paycheck Protection Program provides funds to aid in payroll and utility costs, and they are forgivable so long as the funds are used for eligible expenses. These funds may be used for:
On June 3rd, the US Senate passed additional PPP legislation that:
Companies must apply for a PPP loan by June 30th, and have until December 31st, 2020 to use these funds and be eligible for forgivability. PPP borrowers can choose to extend the eight-week window originally required to use funds, or can keep the original eight-week period. This legislation was passed to make it easier for more borrowers to reach full forgiveness.
Companies now also have until December 31st, 2020 to restore workforce levels and wages to pre-pandemic levels required for full forgiveness. The legislation also added two new exceptions that allow borrowers to achieve full PPP loan forgiveness even if workforce is not fully restored:
In order to qualify for loan forgiveness, companies that receive PPP disbursement must use 60% or more of the funds for payroll and are limited to using 40% of the funds for other qualified expenses. Forgivability amount decreases as headcount and salaries decrease, so employers must keep accurate and detailed documentation of expenses to ensure compliance and maximize forgivability.
If you’ve received PPP funds, take the following steps to prepare the necessary documentation and minimize the reductions in forgivability.