PPP Loan Forgiveness
The Paycheck Protection Program is a loan designed to provide a direct incentive for small businesses to keep their workers on the payroll.
SBA will forgive loans if all employees are kept on the payroll for eight weeks and the money is used for payroll, rent, mortgage interest, or utilities.
The Treasury Department announced that it plans to scrutinize certain loans. “If your company has been able to maintain its pre-pandemic level of revenue”, Bradley said, “it might make sense to return the money before the May 15 deadline”. But if you’re still facing some uncertainty, he added, don’t feel the need to do so. Neil Bradley is the U.S. Chamber of Commerce Executive Vice President and Chief Policy Officer.
Bradley urged all applicants to keep records on the financial conditions you were concerned about when you applied for the loan, such as canceled orders or events. With detailed documentation you can feel comfortable knowing if anyone comes around after the fact and asks if you really needed this loan, you can show documentation about the situation you were facing when you applied.
PPP loans can only be fully forgiven if businesses maintain their employee head counts. Many business owners asked what can be done if employees who had been laid off refused to come back.
According to new guidance from the Treasury Department and the U.S. Small Business Administration this week, you can count in your company’s head count any employees you offer to rehire, even if they decline. Bradley noted that you must issue the employee a written offer for the same position and the same salary.
As of the end of the day Thursday, the current phase of the PPP still had about $125 billion remaining from the original $320 billion allocated. Bradley predicted that new legislation allocating additional relief for businesses would be coming as well, likely after Memorial Day.
What that would look like is still unclear…