If you have extra money left over at the end of the covered period, you have two options: SBA guidance released on May 15 gives borrowers with a biweekly or more frequent payroll schedule the option to use the “Alternative Payroll Covered Period.” This begins the covered period on the first day of the first pay period after receiving the first disbursement. From that date, you’ll have eight or 24 weeks to make eligible payments. The clock starts when your lender makes your first PPP loan disbursement. So, your loan forgiveness depends on your costs during the covered period. Your PPP loan is meant to cover eight or 24 weeks’ worth of expenses. What’s the time period for using the loan on eligible expenses? You can use the remaining 40% to cover qualifying non-payroll costs. The bottom line on how to get your PPP loan fully forgiven: Use at least 60% of your PPP loan to cover payroll costs. Keep in mind that you can use your loan to cover other expenses. *You can use your PPP loan to cover paid sick leave, but you cannot use it to cover paid sick and family leave wages under the Families First Coronavirus Response Act. Worker protection expenditures (e.g., personal protective equipment). ![]() Supplier costs (i.e., essential items for operation).Covered property damage (e.g., vandalism or looting).Covered operations expenditures (e.g., business software or payroll tracking expenses). ![]() State and local taxes assessed on compensation.Employee benefits (e.g., vacation sick leave* health care benefits retirement benefits and group life, disability, vision, and dental insurance).Salaries, wages, commissions, tips, bonuses, or hazard pay ($100,000 gross earnings max per employee).Use at least 60% for payroll costs and 40% for qualifying non-payroll costs. And, the SBA requires you to use the majority of your loan for payroll expenses. ![]() Eligible expenses include payroll and qualifying non-payroll costs. Use it for eligible expensesĪll borrowers, regardless of PPP loan amount, must use 100% of the loan for eligible expenses for PPP loan forgiveness. If you took out a loan of more than $50,000, your PPP forgiveness calculation factors in 1) what you spent your PPP loan on, 2) your employee headcount, and 3) whether you reduced an employee’s wages by more than 25%. You can learn more about this exemption on of the SBA Form 3508S application form. If you took out a loan of $50,000 or less, your loan forgiveness depends on 1) whether you used it for eligible expenses. Borrowers who took out loans of $50,000 or less do not need to worry about loan forgiveness reductions due to employee and wage decreases. *Your responsibilities depend on your loan amount.
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