LEXINGTON, Kentucky (WTVQ) – Repayment of Federal Payroll Protection Program (PPP) loans will begin this month for early 2020 borrowers who have not yet applied for forgiveness.
Following the filing of the forgiveness application, the Chamber said required principal and interest payments are prevented until the Small Business Administration (SBA) decides to forgive the loan.
Approximately 71% of the total number of borrowers of PPP loans have not yet applied for forgiveness.
The earliest PPP loans were issued on April 3, 2020. If the borrower received their PPP loans on that day and chose a 24-week covered period, the borrower’s first loan payment must be made on or around July 17, 2021.
The borrower must apply for forgiveness within 10 months after the end of the coverage period to avoid paying the principal and interest on the loan.
In addition, if the SBA determines that a loan is unforgivable (in whole or in part), the PPP loan is no longer deferred and the borrower must begin paying principal and interest.
In this case, the lender must notify the borrower of the date of the first payment.
However, all is not lost if the borrower is unable to apply for forgiveness before the due date of the first payment.
Although this payment still needs to be made, after the forgiveness application is filed and a decision is made, the SBA will instruct the lender to repay the payments made by the borrower if the amount of the payments is part of the loan forgiveness.
Form 3508S is for loans up to $ 150,000. Form 3508EZ is for loans over $ 150,000 unless the borrower (1) has reduced the number of employees or the average paid hours of employees from January 1, 2020 until the end of the covered period, and has not reduced the annual salary or hourly wages of any employee (whose annual salary was US $ 100,000 or less) more than 25% during the period covered, compared to the most recent full quarter prior to the period covered; or (2) was unable to work during the period covered at the same level of business activity as before February 15, 2020 due to compliance with government health and safety requirements or guidelines issued within the specified time frame.
Borrowers who cannot use Form 3508S or Form 3508EZ must use the “full” Form 3508.
Business owners must assess whether their business qualifies for a potentially lucrative employee retention credit (ERC).
ERC is a refundable payroll tax credit for eligible employers calculated as a percentage of qualified salaries paid to employees between March 13, 2020 and December 31, 2021. To be eligible, a business must meet one of two criteria during a calendar quarter:
- The operation of the enterprise is fully or partially suspended due to orders from the relevant government agency restricting trade, travel or group meetings due to COVID-19; or
- The employer has seen a significant decline in gross revenues.
To learn more about ERC, click the button below to access A guide to employee retention loans…
Former President Trump signed into law the Consolidated Appropriations Act (the Act) at the end of December 2020. More than $ 16 billion has been allocated under the Act in Grants for Indoor Site Operators (SVOGs).
SVOG funds are available to eligible organizations including concert venue promoters and operators, talent representatives, museums, zoos, aquariums and cinemas.
SVOG must be used to cover specified costs such as wages, rent, utilities, personal protective equipment, insurance payments, and scheduled debt payments. As of June 28, 2021, about $ 4 billion remained available. You can read more about SVOG here… The SBA also released detailed manual by program.