As a part of the coronavirus relief bill the CARES Act, businesses were given the opportunity to apply for Paycheck Protection Program (PPP) loans to offset the costs of operation. Business owners could use these loans to cover employee payroll, as well as mortgage interest, rent, and utilities. Over 5 million PPP loans were issued to small business owners, and now, they can apply for loan forgiveness before it's time to start paying it back.
To be eligible for PPP loan forgiveness, the original loan amount must be for $50,000 or less. That means 3.57 million of those 5 million PPP loans are eligible for forgiveness according to the Journal of Accountancy. Other eligibility requirements include having spent 60% or more of the loan on paying employees. The remaining amount could be spent on other eligible business costs. There was a question as to whether you would be eligible for forgiveness if you ultimately still had to lay-off employees or lower wages, but now it's been made clear that business owners will be eligible to apply regardless.
If you received a PPP loan and are eligible to apply, you'll do so directly through your lender. They will submit your application (Form 3508B) and supporting documentation (proving cost allocation) for you to the U.S. Small Business Administration (SBA) who will then determine how much forgiveness you'll be granted. The lender has 60 days to review and send your application, and the SBA has up to 90 days to review and make a determination. There's no hard deadline for applying, the only stipulation is that borrowers must send their application to their lender within 10 months after the end of their covered period.
For more information on the PPP loan forgiveness program, you can check out this information page on the US Treasury Website, and if you're a renter, homeowner, or property manager in LA County, you can check out our COVID-19 Resource Page.