PPP Loan Forgiveness

Question

Debbie Sparks · Accepted Answer

How you use your PPP funds will determine the amount of loan forgiveness you can receive. The SBA guidance on PPP loan forgiveness continues to evolve and we encourage you to monitor this guidance and what it means for you and your business. For now, we’re sharing what we know in order to help you better understand loan forgiveness and how to use your PPP funds. 1. PPP loans will be forgiven if you meet the criteria for how your loan proceeds were applied in the period after you received your PPP loan funding:

Payroll costs, including benefits
Interest on mortgage obligations (for mortgage loans entered before February 15, 2020)
Rent (under lease agreements in force before February 15, 2020)
Utilities (service began before February 15, 2020)

The SBA’s PPP rules require that at least 75% of forgivable loan amounts be attributed to payroll costs. So, no more than 25% of forgivable loan amounts can be attributed to non-payroll costs. The SBA may issue more guidance adding additional requirements for borrowers, including demonstrating eligibility to receive PPP loan funding. 2. The loan forgiveness amount depends on your documented payroll costs and non-payroll costs over an eight-week period. The eight-week period begins on the date Truist made the first disbursement of the PPP loan to your business. 3. If use of all, or a portion of, PPP funding doesn’t meet the criteria for loan forgiveness, you’ll continue to owe principal and interest on your PPP loan. You’ll also be ineligible for loan forgiveness and continue to owe principal and interest if you don’t maintain staff and payroll during specified periods. Specifically:

Number of staff – Loan forgiveness will be reduced if the full-time employee headcount is reduced compared to earlier, specified periods.
Level of payroll – Loan forgiveness will also be reduced if salaries and wages are decreased compared to an earlier, specified period by more than 25% for any employee that made less than $100,000 annualized in 2019.
Re-hiring – Borrowers have until June 30, 2020 to restore full-time employment and salary levels for any changes made between February 15, 2020 and April 26, 2020.

4. Once we have the guidance we need from the SBA regarding additional requirements to qualify you for loan forgiveness, we’ll contact you about how to request loan forgiveness. For now, we strongly encourage you to keep detailed records of how your business is using PPP funds. Clear documentation will help you through the loan forgiveness process. For more information on loan forgiveness and the PPP, please continue to visit the SBA's website as well as the CARES Act section of the Treasury’s website. *Source: Truist Bank