Current Guidelines for Loan Forgiveness under the Paycheck Protection Program
Under the SBA’s program guidelines, there are numerous important steps required for your business to receive loan forgiveness as contained in the CARES Act. Here are key points for you to be aware of in preparing to apply for forgiveness. Please note that these points apply to small businesses in general, but may not apply to self-employed individuals, independent contractors or other business types. This page will be updated as additional information becomes available, but for the latest information please see the SBA’s site. However, all borrowers should start collecting documentation of expenses now.
- The amount of loan forgiveness can be up to the full principal amount of the loans and accrued interest. That is, the borrower will not be responsible for any loan payment if you as the borrower use all of the loan proceeds for forgivable purposes. The actual amount of loan forgiveness must be calculated, in part, on:
- The total amount of qualified payroll costs
- Payments of interest on mortgage obligations incurred before February 15, 2020
- Rent payment on leases dated before February 15, 2020, over the eight-week period following the date of the loan
- Covered Utilities
- Not more than 25% of the loan forgiveness amount may be attributable to non-payroll costs.
- To receive loan forgiveness, you must provide to Pegasus Bank the following documentation verifying for the eight week period following this loan:
- The number of full-time equivalent employees on qualified payroll as well as the dollar amounts of qualified payroll costs
- Covered mortgage interest payments
- Covered rent payment
- Covered utilities
These key points represent our best interpretation of SBA guidelines, and may not include every nuance or detail. For official information, including any updates to these requirements, please reference these SBA publications (may not be a complete list):