If you received a Paycheck Protection Program (PPP) loan—offered via the CARES Act to help small businesses pay workers and cover expenses during the COVID-19 pandemic—you may be wondering when and how to apply for one of its biggest incentives: loan forgiveness. While some rules and requirements have changed due to other relief packages, the Small Business Association (SBA) has provided resources that may help you determine how to proceed in the meantime.
Keep in mind that for the principal to be entirely forgiven, at least 60 percent of the PPP-covered costs must be payroll costs and up to 40 percent can be non-payroll costs (like rent/mortgage, utilities, etc.). Additionally, retailers must diligently document their spending to ensure any audits or document requests can be easily accommodated to avoid any errors when providing documents or certifications to lenders, as those errors could result in the forgiveness being denied or a U.S. Treasury inquiry, according to Nekia Hackworth Jones of Nelson Mullins, a Columbia, South Carolina-based law firm specializing in business finance.
Find out more about loan forgiveness using the resources from the Small Business Association (SBA), or contact your accountant or lender for more information.
Both of the above loan forgiveness applications expire October 31, 2020.
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