If you received funds from the Payroll Protection Program, the amount your loan may be forgiven is based on many factors:

  1. You and your employees must cease collecting unemployment insurance.
  2. If possible, it is recommended that the funds be separated so that it is easier to document how they are spent.
  3. Your loan can only be forgiven up to the sum of allowable expenses incurred and payments made during an eight-week period beginning on the date of receipt of the loan from the lender.
  4. To maximize loan forgiveness you must use at least 75% of the loan amount for payroll costs and not more than 25% on non-payroll costs (#6 b through d).
  5. The amount forgiven could be reduced if you do not keep the same number of full-time employees during the eight-week period or if you decrease wages more than 25%.
  6. Allowable Expenses include:

a.  Payroll costs – including benefits

b.  Interest on mortgages which began before 2/15/20

c.  Rent on leases which began before 2/15/20

d.  Utilities for which service began before 2/15/20

***Please note- Home office expenses are not eligible expenses.

7. The definition of payroll costs for this purpose are:

a.  Salary, wage, commissions or tips capped at $100,000 per employee

b. Employee benefits including costs for vacation, parental, family, medical, or sick leave, payments required for group health care benefits including insurance premiums and payment of any retirement benefit

c.  State and local taxes assessed on compensation

d.  If you are a sole proprietor or independent contractor – wages, commissions, income or net earnings from self-employment capped at $100,000 for each employee

A request to your lender must be made for your loan to be reviewed for forgiveness after the eight week period.  Each lender will have different requirements and requests for documents to prove your eligibility for forgiveness.  These documents can include such things as payroll records, bank statements, cancelled checks, invoices etc.

If your loan is not forgiven, it will accrue interest of 1%.  Payments can be deferred for six months.  The loan must be repaid in 24 months.  There is no prepayment penalty.

If you have any questions please do not hesitate to contact our office.

Christine Murphy, EA