Servicing a loan is one of the craziest undertakings that most borrowers have to contend with. Who survives without a loan anyway? You apply for a loan, it gets approved, and you smile to the bank. What next after this? Loan forgiveness and repayment may not be smooth as some would think.
America’s Paycheck Protection Loan program is one of the most ideal financial instruments rolled out by the government to cushion individuals, businesses, and various entities from tough economic times.
Though a number of borrowers qualify to get the funds, the huddle of repayment can be a nightmare for many. Payment forgiveness is one critical aspect that can save you from the worry of the loan forgiveness process.
How Can I Get My PPP Loan Forgiven?
Paycheck Protection Program, commonly referred to as PPP, is an American loan program designed to provide direct incentives to small businesses in order to discourage layoffs.
Ideally, the loan targets to protect America’s labor force during hard economic times. PPP Loan forgiveness helps grant aid to those still suffering from the adverse effects of the COVID-19 pandemic.
Employers in this case are required to meet stipulated guidelines set by America’s Small Business Administration regarding rehiring employees with PPP funds. Options and additional resources can be found on the SBA’s website.
Loan forgiveness is fully granted in cases where the funds are strictly channeled towards employee salaries. Employers in this case are entitled to the loan if they prove to carry on with the hiring process without affecting the salary scale of employees.
Reduction in the number of full-time employees or decreasing the amount paid in salaries results in a reduction of the amount offered to cushion your company from firing staff.
To emphasize, the PPP loan forgiveness process strictly focuses on ensuring employees retain their jobs despite prevailing harsh economic times. It is against this backdrop that SBA insists on directing the amount offered through the program to paying wages. It’s best practice reflect this in your Paycheck Protection Program loan forgiveness application.
How to Apply for PPP Loan Forgiveness
The following entities qualify for PPP loan forgiveness in the United States:
In addition to these, any business entity as defined in the following sections:
Steps to Apply for PPP Loan Forgiveness
What are the New Rules for PPP Loan Forgiveness?
The US government has introduced various changes to the PPP loan forgiveness application process.
The US President Donald Trump signed into law new legislation that introduced a raft of measures geared towards cushioning the law force. The move is one of the relief options for the US labor force that has been grappling with the economic effects of COVID-19.
Some changes include:
Other aspects of the new law indicate that borrowers can get full loan forgiveness even in cases where they fail to restore their workforce fully.
The US government through congress is banking on this relief fund and other relief options to cushion small businesses from harsh prevailing harsh economic times that has taken a toll on most businesses.
Borrowers who qualify to get the funds are entitled to up to $10 million to spend on payroll, rent, utilities and mortgage.
Ideally, paycheck protection program PPP is made available for small businesses in operation since February 15th with a total of 500 employees or fewer employees.
Another target group for funding includes self-employed personnel, veteran organizations, sole proprietors, independent contractors, and tribal concerns. Under various circumstances, businesses with more than 500 employees are considered to benefit from the program.
Are Funds Released Under the Paycheck Protection Program Taxed?
The answer is no.
America’s Internal Revenue Service IRS released a directive that disallows taxation of PPP funds. In this regard, businesses can not claim any deduction for expenses inquired under the PPP program.
Under the Cares Act, the forgiven loan doesn’t incur any taxable income to the business. The Cares Act indicates that proceeds or expenses incurred from a paycheck protection program cannot be subjected to any deductions. In simple terms, funds released under the US paycheck protection program are not subjected to taxation.
Need Help Applying for PPP Loan Forgiveness?
PPP Loans were part of a crucial stimulus package that aided small businesses during the coronvirus pandemic. For those who were granted this loan, forgiveness is necessary to ensure you won’t end up owing the government and the IRS.
If you are looking for help about how part or whole of your PPP loan can be forgiven, then contact Silver Tax group for quick assistance.