As our firm continues to closely monitor resources offered to small businesses during the coronavirus pandemic, we are pleased to share some long-awaited news regarding the Paycheck Protection Program (PPP).
On May 15, the U.S. Small Business Administration (SBA) and U.S. Treasury released the highly anticipated PPP loan forgiveness application and its corresponding instructions, bringing an end to weeks of lenders speculating about the process.
According to the application, if a borrower used at least 75% of the loan proceeds on eligible payroll costs, spent no more than 25% on eligible non-payroll costs and maintained staffing and salary levels, the full amount of the PPP loan may be forgiven. If the borrower does not meet all of those requirements, the application also provides step-by-step instructions for small businesses to calculate and confirm their reduced forgiveness amount. Furthermore, those expenses must have been incurred during the eligible eight-week period of the loan (normally beginning on the date funds are given to the borrower). If the funds are used outside the eight-week period, they are not eligible for forgiveness and must be repaid in full at a 1% interest rate.
The application and its related guidance also specifies the documentation required to substantiate the borrower’s payroll costs, staffing and salaries, and non-payroll costs, including mortgage interest payments, rent or lease payments and utility payments.
For more information about the PPP loan forgiveness application, below is an article from The National Law Review that we found particularly useful. Here at Busch, Slipakoff, Mills and Slomka, our attorneys regularly assist small businesses that participate in lending programs offered by the SBA. Please do not hesitate to contact us with any further questions.