Since the second round of the Paycheck Protection Program opened on April 27, about 2.2 million loans have been made to small businesses, totaling more than $175 billion, according to the Small Business Administration. The loans, which are intended to cover eight weeks of payroll expenses, as well as rent, most mortgage interest and utility costs, are forgivable. Small business owners that have received an emergency loan through the Paycheck Protection Program are now trying to understand the terms of forgiveness. Those terms include:
- The eight-week clock starts ticking when the employer receives the funding, which means firms could be paying workers to stay home if businesses are still subject to coronavirus-related business shutdowns and stay-at-home orders.
- You must use at least 75% of the amount you borrowed for payroll expenses, with only 25 percent allowed for rent, utilities and other overhead.
- Any portion that isn’t forgiven must be repaid in two years — following a grace period of six months — at an interest rate of 1%.
To learn more about PPP loan forgiveness, please visit: https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program.