Navigate PPP loan remission
WAUSAU, Wisconsin (WSAW) – If you are a business owner who received a loan under the Paycheck Protection Program, you may be eligible for partial or full loan forgiveness. But navigating this process can be tricky. Here’s what you need to know at the start of your application.
What is the Paycheque Protection Program?
The Paycheck Protection Program has been a critical way for the United States government to help small businesses overcome COVID-19 closures. The program, funded by the Small Business Administration (SBA), provided business loans to cover eight weeks of wages and other costs. The PPP was aimed at maintaining the viability of businesses and enabling employees to pay their bills. More than 5 million businesses have been approved for financing under the program, representing $ 525 billion in loans.
PPP loans are forgivable if borrowers spend at least 60% of the proceeds on labor costs. Even if a business does not meet the threshold, a partial discount may be an option.
Here’s what small business owners need to know about loan forgiveness.
Does my business qualify for PPP loan forgiveness?
There are a few key points to keep in mind when it comes to qualifying for a PPP loan forgiveness:
- You must have kept all of your full-time employees on the payroll – or rehired them within 24 weeks of receiving your loan.
- To be eligible for full loan forgiveness, salary costs must be 60% or more of the forgiven amount. Conversely, only 40% or less of the amount remitted may have been used for non-salary expenses, such as rent and utilities.
- If you have used less than 60% of your loan on salary costs, you may be eligible for partial forgiveness.
- If you are self-employed, you can also qualify for a PPP loan discount. You have the right to claim 2.5 months of your 2019 net profit to replace lost wages. Learn more about PPP loans for sole proprietorships.
Prepare your PPP loan forgiveness request
Keep the following tips in mind when completing the PPP loan forgiveness request:
- Get help from a qualified accountant. The request for PPP loan forgiveness is complex. If you can afford it, it is advisable to seek the help of an accountant while you fill out the forms and gather all the necessary documents. Anything good on paper could make the difference between your loan forgiveness or not.
- Don’t rush to apply. Even though the SBA is now accepting loan forgiveness requests, it continues to publish advice in a frequently asked questions document. These clarifications could help your business qualify for the pardon, which is why many accountants believe that waiting for further clarification is the best course of action. For example, on August 11, the SBA clarified that employer payments for certain health care benefits are considered salary costs eligible for the rebate. The deadline for PPP loan forgiveness requests has not yet been announced.
- Make sure you have all the necessary documents in order. Even if you don’t plan on applying immediately, it’s important to gather and organize all the documentation you’ll need to apply. Guidelines can change quickly, so you need to be prepared in case the requirements change or a deadline is set.
For more information
To learn more about how to apply for and qualify for a PPP loan forgiveness, see the SBA frequently asked questions about PPP loan forgiveness document.
For more information or for further inquiries contact the Wisconsin BBB at www.bbb.org/wisconsin, 414-847-6000 or 1-800-273-1002. Consumers can also find more information on how to protect themselves against scams by following the Wisconsin BBB on Facebook, Twitter, Instagram and Youtube.
Copyright 2020 WSAW. All rights reserved.