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NE IOWA | LOAN FORGIVENESS
74) Can a PPP loan be forgiven in whole or in part?
Yes.
The amount of loan forgiveness can be up to the full principal amount of the loan and any accrued
interest.
75) How does a borrower get the entire PPP loan forgiven?
The borrower will not be responsible for any loan payment if:
1. The borrower uses all loan proceeds for forgivable purposes, and
2. Employee and compensation levels are maintained.
76) How is the forgiveness amount calculated?
The actual amount of loan forgiveness depends, in part, on payments made over the eight-week period
following the date of the loan, including:
1. The total amount of payroll costs,
2. Payments of interest on mortgage obligations incurred before February 15, 2020,
3. Rent payments on leases dated before February 15, 2020, and
4. Utility payments under service agreements dated before February 15, 2020.
77) How much of the loan forgiveness must be attributable to payroll costs?
At least 75% of the loan forgiveness amount must be attributed to payroll costs. Not more than 25% of
the loan forgiveness amount may be attributable to non-payroll costs.
78) Why is forgiveness heavily weighted to the percentage of payroll costs, when the CARES Act
allows a mix of payroll costs and other payments to determine loan forgiveness?
The April 2, 2020 Interim Final Rule states:
“[w]hile the Act provides that borrowers are eligible for forgiveness in an amount equal to the
sum of payroll costs and any payments of mortgage interest, rent, and utilities, the [SBA] has
determined that the non-payroll portion of the forgivable loan amount should be limited to
effectuate the core purpose of the statute and ensure finite program resources are devoted
primarily to payroll.”
The FAQs for this program is 27 pages long and that is just the one from the ABA, so patients is key. We are all trying to figure it out. | |
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SBA PPP loan?
