Forgiveness of Indebtedness on PPP Loans
The PPP program was incorporated to help small businesses keep their employees on the payroll. Due to the pandemic, many small business owners have suffered financially and the PPP program offers them an opportunity to get back on their feet. It is an incentive that can be used for things like payroll costs and health benefits, rent, mortgage interest, uninsured property damage, utilities, and vendor expenses. Payroll cost is the most essential if the business owner wants to keep the operation running. You will need a Bucks County Business Law Attorney to guide you through the process, so you know how to handle everything before and after the application has been approved.
Payroll Costs
Payroll costs include employee wages, commissions, and salaries as well as tips or any of its equivalent. It also includes specific licensing and compensating employees who have been dismissed or fired, depending on the situation. The business owner may have to pay for group health insurance benefits, which include the monthly premiums and payment of possible retirement benefits as well as local and state taxes as part of the worker’s compensation. A Bucks County Business Lawyer can help you figure out the PPP requirements.
The Qualification
If you are a small business owner, and you qualify, you would go through the application process and provide documentation to prove that you are either an independent contractor or small business owner, operating with one or more employees. The Small Business Association offers loan forgiveness to those who meet the employee retention eligibility criteria. The loan must be used to pay for those eligible expenses and costs discussed above.
The Specifics of the Loan
The interest rate for PPP Loans is 1%. If you received the loan prior to June 5, 2020, it will have two-year maturity, but after that date, it will have a five year maturity. If you are asking for loan forgiveness, the Small Business Association has to remit the loan amount to the lender, so it can be forgiven, but in the meantime, the loan amount has to be paid until such time. Once the time period has ended for you to request loan forgiveness and you have not requested it, then the payments will be adjusted after ten months. No fees will be charged by the lenders or the government.
The Eligible
There are certain individuals or businesses that would be eligible to qualify for the PPP loan and these include:
• Sole Proprietors
• Non-profit organizations
• Businesses that meet the size guideline
• Businesses with more than 500 employees
• Businesses with one or more locations
How Can You Apply for a PPP loan?
If you or your company is eligible to receive a PPP loan, you must submit your application before May 31, 2021. To do so, you must choose a lender and submit the required documentation. SBA-authorized lenders, including a wide variety of banks and credit unions, will make PPP loans. Many Bucks County PA Attorneys are helping borrowers to go through the process much smoother.
Full Forgiveness
If you requested full PPP loan forgiveness, and you are self-employed or a small business owner, there are certain guidelines that you must follow. These include:
• Use of at least 60 percent of the loan and it must cover your salary if you are a self-employed worker, or payroll costs if you have a company. Salary would include commissions, wages, and tips on an annual basis, and it can be $100,000 or less
• Use of 40 percent of the loan for other qualifying expenses such as utilities, rent, and mortgage interest
• Use of the loan within 6 months or 24 weeks (covered period) after the funds have been sent to your bank account
The same way that the small business owner applies for a PPP Loan and is forgiven, the self-employed worker or independent contractor can too. When the time comes for the loan to be forgiven, the borrower has to approach the lender. Most lenders will review the documents and assess whether the loan should be forgiven or not. The lender has sixty days from the day of the application to make that determination. The Small Business Association is the government entity that will refund the lender with the forgiven amount of your loan.
Consult a Lawyer
Many attorneys are providing help to borrowers of PPP Loans. If you failed to document eligible expenses including payroll costs, you could need legal representation. In addition, the rules associated with PPP Loans can be complex and always changing, but an attorney is equipped to help you. You can contact a Bucks County Business Attorney for help to go over your loan contract and to see what is expected of you. The Bucks County Business Lawyer will also inform you of your rights for full loan forgiveness.
Consult a Law Firm In Bucks County PA such as Olen Law Office for help with following and complying with the PPP guidelines.