How much of my PPP loan will be forgiven?
May 01, 2020
In this 2-minute read:
- How much of the loan can be forgiven?
- What can cause a PPP loan’s forgiveness amount to be reduced?
- Is PPP loan forgiveness automatic or do I need to do something?
As businesses are receiving their PPP loans to help them through the COVID-19 crisis, it’s important to know how to allocate and document the funds you get in order to have your loan forgiven.
The Paycheck Protection Program’s primary purpose is to help businesses maintain their employee wages and payroll expenses, so the rules for loan forgiveness favor its use for maintaining your payroll.
IMPORTANT NOTE: On Wednesday, May 13, 2020, the SBA released revisions to their FAQs regarding PPP loan forgiveness. Read the details here.
Womply is acting as a facilitator to connect American small businesses to SBA-authorized lenders to get emergency loans for COVID-19 relief. Start your free application here, or call us at 855-208-8813 for a free consultation.
How much of my PPP loan can be forgiven?
You have the potential to have your entire PPP loan forgiven, which is a huge motivator for small businesses to use it properly. Your loan forgiveness depends on what you use the funds for. If you use your PPP loan for anything other than payroll costs and approved business expenses like mortgage payments, rent, and utilities over the 8 weeks after you receive your funds, you will have to pay at least part of it back.
Due to the high subscription for this loan, it is anticipated that no more than 25% of the forgiven amount can be used to cover non-payroll costs.
What can cause a reduction in my PPP loan forgiveness amount?
The following items can cause you to have your loan forgiveness amount reduced:
- Decreasing your full-time employee headcount after February 15, 2020
- Decreasing employee salaries and wages by more than 25% if they made under $100,000 in 2019
If you have done either of these things, you have time to make a change in order to get your loan at least partially forgiven. You just need to restore your employee headcount and wage levels by June 30, 2020 for any changes that were made between February 15, 2020 and April 26, 2020.
Have more questions? Here are some other helpful articles about PPP loan forgiveness:
- What is the covered period for PPP loan forgiveness? When does it start?
- What do I need to do to get my Paycheck Protection Program loan forgiven?
- Do I have to pay back my PPP loan? Here’s how to get your loan forgiven
Want to apply for your PPP loan? You still can, but HURRY
If you haven’t yet applied for the PPP loan, it’s not too late. Though we strongly recommend that you do so soon due to the high demand for this source of emergency funding.
Womply is a verified loan facilitator working to connect America’s small businesses with eligible SBA 7(a) lenders who are still accepting PPP loan applications. Want more information? Give us a call at 855-208-8813 for a free consultation or click here to start your free application.
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