Paycheck Protection Program (PPP) Loan Forgiveness

Thinc Strategy

June 12, 2020

In March, congress passed the Coronavirus Air, Relief, and Economic Security Act (“CARES Act”), and since then companies throughout the country have jumped on applying for the Paycheck Protection Program (PPP) loan. On June 5th, congress passed an amendment to the CARES Act called The Paycheck Protection Flexibility Act. This amendment gives borrowers greater flexibility when for qualifying for loan forgiveness for their PPP loan. Following weeks of many unknowns around the logistics of the PPP loan and several rule changes made by the Small Business Administration (SBA), we can finally say we have some certainty regarding how Borrowers can apply to have their PPP loan forgiven.

While we know there may be future updates to these guidelines, here is what we know now regarding PPP loan forgiveness:

• You are eligible for forgiveness eight weeks from the date of disbursement of PPP funds

• To apply for forgiveness, the Borrower must complete the PPP Loan Forgiveness Application and return it to their lender who is servicing the loan

• In an effort to prevent large, public companies from accessing the fund, PPP loans over $2 million will be audited

• The amount of loan forgiveness the Borrower applies for may be subject to reductions

Payroll Costs Eligible for Forgiveness

• Payroll costs paid and payroll costs incurred during the eight-week (56-day) covered period

• Payroll costs are considered paid on the day that paychecks are distributed, or the Borrower originates an ACH credit transaction

• Payroll costs are considered incurred on the day that the employee’s pay is earned

(For each individual employee, the total amount of cash compensation eligible for forgiveness may not exceed an annual salary of $100,000, as prorated for the covered period)

Nonpayroll Costs Eligible for Forgiveness

• Covered Mortgage Obligations: payments of interest on any business mortgage obligation on real or personal property incurred before February 15, 2020

• Covered Rent Obligations: business rent or lease payments pursuant to lease agreements for real or personal property in force before February 15, 2020

• Covered Utility Payments: business payments for a service for the distribution of electricity, gas, water, transportation, telephone, or internet access for which service began before February 15, 2020

(Eligible nonpayroll costs cannot exceed 25% of the total forgiveness amount)

Learn About Our Financial Strategy Services Or For Additional Guidance Regarding Your PPP Loan, CONTACT US

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