PPP loan forgiveness grants: Is a $150k enough for your business?
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Congress is asking the feds $150k ppp loan grants, because the ppp loan forgiveness application is to complicated for many small business owners to understand.
What are some of the issues with the ppp loan grants application?
Forgivable Costs of the PPP loan forgiveness grants . The SBA’s guidance provides for four broad categories of costs that are eligible for forgiveness: (1) payroll costs; (2) business mortgage interest payments; (3) business rent or lease payments; and (4) business utility payments. Subject to some exceptions, forgiveness is generally available for costs incurred with respect to these items during the borrower’s “Covered Period,” which is the eight-week period that begins on the date the PPP loan was disbursed. As with prior guidance, the SBA requires that at least 75% of the forgiven amount be attributable to payroll costs. This article covers each category in depth below.
Payroll Costs. The SBA’s guidance allows a PPP borrower to deduct payroll costs “paid” or “incurred” during the borrower’s eight-week Covered Period (or an Alternative Payroll Covered Period). Under the guidance, payroll costs are considered paid on the day that paychecks are distributed or that the borrower originates an ACH credit transaction. Payroll costs are considered incurred on the day that the employee earned the pay. This distinction allows employers some flexibility in timing their use of PPP funds.
Who would qualify for the ppp loan grants?
In order to qualify for the ppp loan grants, one must maintain at least 75% of total salary.If the employee’s pay over the 8 weeks is less than 75% of the pay they received during the most recent quarter in which they were employed, the eligible amount for forgiveness will be reduced by the difference between their current pay and 75% of the original pay.
What documents are needed for PPP loan grants forgiveness?
- Documentation verifying the number of employees on payroll and pay rates—including IRS payroll tax filings and state income, payroll, and unemployment insurance filings
- Documentation verifying payments on covered mortgage obligations, lease obligations, and utilities
- Certification from an authorized business representative that the documentation provided about the small business is true and that the amount being forgiven was used in accordance with the program’s established guidelines.
How do you calculater the maximum amount for the PPP loan grants forgiveness?
The maximum amount of money you can borrow through the PPP is equal to 2.5 times your average monthly payroll costs or $10 million, whichever is lower. You should exclude from your calculation of average monthly payroll costs any compensation in excess of $100,000 per employee.
Conclusion:
Although, congress has agree to make some major changes to the ppp loan grant forgiveness application. The push to automatically forgive up to $150k with out the filling out a complicated application would benefit much more.
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