The Paycheck Protection Program (PPP) is designed to be a lifeline for small businesses and their employees during a crisis none of us could have ever seen coming. Even before considering loan forgiveness, PPP loans’ terms, lack of fees, and 6-month deferments make them a source of equity for each borrower’s future.

When it comes to the loan’s purpose, it’s all about that first “P”, but that paycheck is also essential when it comes to loan forgiveness. Loan forgiveness may seem too good to be true, but to make it a reality for your business, the SBA has laid out specific guidelines small business owners need to follow to have some or all of their loans forgiven. 

What Qualifies a Business for PPP Loan Forgiveness? 

PPP loans are completely without fees from the government and lenders, and payments are automatically deferred for six months. In order to be fully forgiven, the loan funds must be used for payroll, interest on mortgages, utilities, and rent. 

Specifically, 60% of the loan funds must be used for payroll. The employer must maintain or quickly rehire employees at the same salary level they held before COVID-19 shut business down. 

What Will Cause a Business to Lose PPP Loan Forgiveness?

If an employer reduces its full-time employee headcount, or if salaries or wages are reduced, the amount of the loan to be forgiven will be reduced. A new exemption has been added for businesses whose headcount goes down despite good faith, written offers to keep an employee on staff which are declined.

How Do You Calculate if Your Loan will be Forgiven?

The SBA has provided instructions to help small business owners calculate their payroll and determine if they’re in compliance with loan forgiveness parameters. It takes into account payroll cycles and non-payroll expenses, and how to incorporate exemptions and adjustments that have been made with each new wave of funds.

CLICK HERE to apply for a forgivable PPP Loan with Lendistry. 


PPP Loan Forgiveness Application

Solicitud de condonación de préstamos PPP