On Friday, May 15, the Small Business Administration (SBA) and Treasury Department released the long-awaited Paycheck Protection Program (PPP) Loan Forgiveness Application packet, designed to educate borrowers on how to apply for PPP loan forgiveness. A copy of the 11-page document can be found here. Any portion of the loan that is not forgiven will carry an interest rate of 1.0% and is due to be paid back within two years, however, payments are deferred for the first six months. There’s no pre-payment penalty.
You can submit a request to the lender that is servicing the loan. The request will include documents that verify the number of full-time equivalent employees and pay rates, as well as the payments on eligible mortgage, lease, and utility obligations. You must certify that the documents are true and that you used the forgiveness amount to keep employees and make eligible mortgage interest, rent, and utility payments. The lender must make a decision on the forgiveness within 60 days. It will be important for borrowers to properly document their spending so that their Loan Forgiveness Application is approved.
The money obtained from the PPP loan can be used for payroll (no more than $100,000 annual salary per employee) as well as benefits (including paid sick leave and insurance premiums) and taxes on compensation. Up to 25% of the loan may be used to cover mortgage interest, rent and utilities. The covered expenses have to be incurred from Feb. 15, 2020 through June 30, 2020. Businesses have to have been operating by Feb. 15, 2020.
The loan amounts will be forgiven as long as:
-The loan proceeds are used to cover payroll costs, and most mortgage interest, rent, and
utility costs over the 8 week period after the loan is made; and
-Employee and compensation levels are maintained.
Here is a copy of the PPP Borrow Information Fact Sheet released by the US Treasury Department. For more information or assistance, contact the City of Renton’s Business Assistance Hotline at (206)503-1742 or send an email to [email protected]