In response to the economic impact of Covid-19 on businesses, the U.S. Small Business Administration administers the Paycheck Protection Program (PPP) to provide loans to businesses to keep their workforce employed. A business that obtained a First Draw or Second Draw PPP loan can seek forgiveness of the loan if certain requirements have been met, such as employee and compensation levels were maintained during the covered period, 60% of the proceeds were spent on payroll costs, and the proceeds were spent on payroll and other eligible expenses. A borrower can seek forgiveness once all the loan proceeds have been used, but if they do not apply for forgiveness within 10 months of the last day of the covered period, payments will be required to start being made to the lender. Even though forgiveness can be sought up until the maturity date of the loan, a business should seek forgiveness as soon as possible after the terms of forgiveness are met, thereby avoiding any payments needing to be made.
Contact the law firm of Allison & Mosby-Scott if you have concerns regarding your business and PPP loans.
PPP Loan Forgiveness (sba.gov)
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