by ProsperityME staff
The Paycheck Protection Program, or PPP Loan, is a federal program run by the U.S. Small Business Administration (SBA), designed to help small business owners and their employees during the coronavirus crisis. The application window for the PPP closes on June 30, but those who were granted loans still have to apply for forgiveness after the loan period ends.
Maintaining communication with your lender during the loan period is important. They can help you understand the next steps and alert you to any important program changes. We hope that by sharing these general program guidelines, ProsperityME can help immigrant business owners manage their loans and successfully apply for forgiveness.
Guidelines for managing your Paycheck Protection Program loan:
1. Track your loan expenses during the lending period. To be eligible for forgiveness, 60% of the loan must be used for payroll expenses. Only 40% can be used for other expenses. Contact your lender if you have questions about what expenses qualify.
2. You must retain or re-employ the original number of employees through the loan period ending December 31, 2020. Money applied to employees who are not retained, rehired, or replaced may not be eligible for forgiveness.
3. Payroll for employees making less than $100,000 cannot be reduced by more than 25%.
4. Funds can be used to pay for eligible expenses during the 24-week covered period. Contact your lender after funds have been spent, or after the 24-week eligibility period ends, for updated forgiveness application information. Your lender can help you determine your next steps.
5. Any part of the loan not eligible for forgiveness will be repaid at a rate of 1% over the remaining 60-month term. You have 10 months to apply for forgiveness before the repayment period begins. We strongly encourage loan recipients not to wait to wait to apply for forgiveness! Contact your lender as soon as possible to review your forgiveness options. You should not have to repay your PPP loan if you are eligible for forgiveness! For best results, give yourself and your lender plenty of time to process your application.
We hope these general guidelines help PPP recipients manage their expenses during this difficult time. A good working relationship with a bank or credit union that you trust will be key to weathering this health and economic crisis. If you have questions about an active loan, contact your lender. You can also contact our staff at ProsperityME if you have questions about financial management or the PPP loan. We are happy to help you!