So You Got Your PPP Loan…Now What?
Receiving PPP funds provided immediate financial relief to many businesses and organizations around the country. This program has allowed many employers to maintain their staff by covering wages and employment benefits. As long as funding from the program was spent in the right ratios on payroll, rent and utilities, the loan would be forgiven, and you’re basically looking at free money, right? Not so fast. There are quite a few caveats embedded in the program. In fact, even well-intentioned businesses may make a misstep while using these funds. It’s critical for businesses to understand the PPP loan forgiveness terms in order to maximize the amount that will be forgiven.
While the best advice is always to consult your accounting or banking professional, this piece articulates some of the key places businesses may make mistakes or misinterpret the PPP guidelines. Avoid losing out on forgiveness by familiarizing yourself with these areas of the loan terms:
Headcount Reduction
Pay Rate Reductions
Missing the Rehire Window of Opportunity
Missing the Pay Cut Reversal Window of Opportunity
Bad Documentation
The 25% Non-Payroll-Costs Rule
Failing to Spend at Least 75% on Payroll-Costs Rule
Self-Employed Folks Counting on Full Forgiveness
-Excerpted from Losing PPP Loan Forgiveness, for Evergreen Small Business