SBA Offers 10 Tips On PPP Loan Forgiveness

Steps Banks And Their Clients Should Take For Best Results

Keith Griffin

May 12, 2020

Small Business Administration headquarters

Amidst calls for automatic forgiveness of all Paycheck Protection Program loans outright, the Small Business Administration is offering advice on the steps employers and banks should take to ensure forgiveness regardless. Guidance continues to evolve on the program.

John Fleming, director of the SBA Delaware District office, spoke at a webinar presented by Delaware Business Times, the Delaware Small Business Development Center and the SBA and sponsored by BNY Mellon Wealth Management, Harvey Hanna & Associates, and Union Park Volvo.

According to a Business Times story, the loans, typically worth tens of thousands of dollars but ranging up to $10 million, are convertible to forgivable grants if at least 75% of the funds are used for payroll expenses over eight weeks. The remaining 25% can be forgiven if used for fixed costs like rent, utilities, and mortgage interest.

Fleming offered these tips:

  1. Keep detailed records and open a new deposit account for the loan.
  2. Recipients will have to apply for forgiveness.
  3. A laid-off or furloughed employee can decline an offer to be rehired under the PPP without impacting a loan recipient.
  4. Falling short of 75% target doesn’t cancel the forgiveness.
  5. Receipt of loan proceeds starts the clock.
  6. The money can be returned.
  7. The $100,000 limit for employees does not include benefits.
  8. An Economic Injury and Disaster Loan must be subtracted from the forgivable portion of the PPP.
  9. Employee payroll taxes can be counted toward payroll expenses, but not the employer’s taxes.
  10. Don’t use funds on expenses not specifically approved.

That last one might be the most important. Officials advised recipients to stick to the eligible expenses as provided by the SBA and U.S. Department of Treasury. The agencies published a guide of frequently asked questions that is routinely updated to provide clarifications on many specific questions.

Read the complete story for in-depth guidance on each of the 10 points.

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