Having 500 employees or less than that? Is your business is affected by coronavirus? If the answer is yes then PPP loan is for you. This program is part of the CARES Act and under which there is one big benefit of Forgiven of Loan. This loan forgiveness is a program to help the small and individuals business owner to sustain in the market in this crucial time. You need some documents, you should know some conditions and policies to apply for the forgiveness of the PPP loan. The below article helps you to understand it more.
What is QuickBooks PPP Loan Forgiveness on Payments to Owners
PPP Loan forgiveness is a great benefit of the PPP program. Your loan may be forgiven in some cases if you have spent at least 75% on eligible payroll costs and 25% on eligible non-payroll costs. There are a total of 3 steps to apply for the forgiveness of loans. Follow the requirement, track expenses, and apply for loan forgiveness. These steps will take you towards the loan forgiveness.
Some uses of PPP loan count towards how much forgiveness is allowable
- Payroll costs
- Rent bills under date before 15 February 2020
- Utility payment such as electricity, water, gas, telephone, transportation, or internet access, etc under provider agreements dated earlier than February 15, 2020
- For positive employees identified in the statute, extra wages paid to tipped employees
Understand the Loan Forgiveness
Below are some points through which anyone can prepare for the PPP Loan forgiveness.
- Pay employees – Number of Payroll employees average should be the same you have mentioned between 15 February 2019 and 30 June 2019. If the business was remained closed between these dates you should maintain the employees between 1 January 2020 and 15 Feb If there is any difference since 15 Feb 2020, then you need to hire that number of employees till 30 June 2020 else forgive amount may be reduced
- Need to maintain employees’ salaries and wages – PPP Loan covers annual eligible payroll costs of up to $10,000 per employee. If you will reduce the employee pay by 25% or more then the forgivable loan amount may be reduced. If you have already done the same you need to restore each worker’s normal salary and wages.
- Spend the loan on eligible costs – Keep the accurate record of employee payroll costs, stay organized, and track your spending. You need to spend the minimum 75% of the forgivable amount on eligible payroll costs. Don’t use more than 25% on eligible non-payroll expenses.
- Spend the Loan within 8 weeks – Don’t speed the full loan in the 8 week period after you receive the same. However, the amount spends after 8 weeks is not forgivable.
How does Loan forgiveness work?
If you are the recipient of the PPP loan, you need to submit the PPP loan forgiveness application to your lender or the lender servicing your PPP loan. After submitting the loan lender will determine your eligibility. Your PPP loan should be with below information:
- Employee pay rates
- Payroll tax filings
- Number of personal on the payrolls
- Payroll prices inside the 8 weeks following disbursement of the loan
- Rent or rent payments within 8 weeks of getting the loan
- Mortgage interest payments within 8 weeks from getting the loan
- Utility payments or bills within the 8 weeks after getting the loan
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