Paycheck Protection Program Early Loan Forgiveness
Small businesses that have received Paycheck Protection Program (PPP) loans may apply for early loan forgiveness before the 24-week or 8-week covered period ends if the borrower has used all the loan proceeds for which the borrower is requesting forgiveness. But it comes with a caveat.
According to the US Small Business Association and Treasury’s interim final rule released June 22, borrowers forfeit the safe harbor rule that allows them to restore employees’ salaries or wages by December 31, 2020 and prevent reductions in the loan forgiveness they receive. If the borrower applies for forgiveness before the end of the covered period and has reduced any employee’s salaries or wages in excess of 25%, the borrower must account for the excess salary reduction for the full 8-week or 24-week covered period, whichever one applies to the loan.
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