The Requirements for Forgiveness | Steps You Must Take
If you own or operate a small business that’s been affected by the COVID-19 pandemic, the Payroll Protection Program (PPP) offers assistance to help you get through the lean times and move forward as the economy restarts. The entire loan may be forgiven, but there are limitations on the use of the funds, as well as steps you must take to qualify for forgiveness.
The Use of Payroll Protection Program Funds
PPP funds are intended primarily to cover the costs of payroll, including wages and salaries, health insurance, sick and medical leave, and vacation pay. Under the law establishing the PPP, at least 75% of the funds obtained must be used for payroll. Other permissible expenses include utilities, mortgage interest, and rent payments.
Forgiveness of the Loan
To successfully have your loan forgiven, you must provide the following minimum documentation with your application for forgiveness (your lender may require addition submissions):
- Itemized documentation of the number of full-time employees and their pay rates for the period of the loan, as well as retirement and health insurance contributions and payroll tax filings
- Documents identifying all utility, mortgage, or rent payments made during the period of the loan
The loans have a two-year repayment period, but the outstanding balance is not due until the end of that period. You will accrue interest at a rate of 1% until your loan is forgiven, so it’s in your best interests to seek forgiveness as soon as possible. There is no prepayment penalty.
Contact MCIS Law for Assistance with Forgiveness of a PPP Loan
At MCIS Law, PLLC, in Stafford, we provide comprehensive counsel to startup and existing businesses in southeast Texas. For a confidential consultation with an experienced and knowledgeable lawyer, email us or call our office at (346) 297-0121. We are currently communicating with clients by phone, text message, and videoconference. We accept all major credit cards.