PPP loans provided a major relief to small businesses during the COVID-19 pandemic, giving businesses additional funds for payroll and other expenses. To further reduce the burden on small businesses, the loans, if used correctly, may be forgiven altogether.
“We want to remind our members and others in the marine industry to, if eligible, apply for PPP Loan forgiveness,” said Chad Tokowicz, Government Relations Manager for the Marine Retailers Association of the Americas. “While the PPP loans were helpful in injecting capital into many industry businesses, forgiveness is another important aspect of the program.”
In order to be forgiven, 60% of a PPP loan must be spent on payroll and the remaining 40% spent on other eligible expenses. The Consolidated Appropriations Act of 2021 (the second stimulus bill) expanded eligible expenses from rent, utilities and the interest portion of any mortgage payment to include:
- Operating Expenditures
- Property damage costs
- Supplier costs
- Worker protection expenditures
Timing and expenses are two of the most important aspects for PPP forgiveness. You must only spend the loan on eligible expenses and your application for forgiveness must be completed within the specified timeline. Borrowers can apply for forgiveness once all loan proceeds for which the borrower is requesting forgiveness has been used. Borrowers can also apply for forgiveness any time up to the maturity date of the loan.