
The crisis that is coming with the pandemic has made governments think of ways to help people who are in debt and who for one reason or another have decreased their income during COVID 19.
That is why today we have the Paycheck Protection Program that’s intended to help small businesses to survive these hard times.
What exactly is the PPP loan forgiveness?
The Paycheck Protection Program is a loan program that originated from the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
This was originally a $350-billion program with the idea to provide American small businesses with eight weeks of cash-flow assistance through 100 percent federally guaranteed loans.
The program was expanded by the Paycheck Protection Program and Health Care Enhancement Act, adding $310 billion in funding.
The Paycheck Protection Program has made some changes that are important. Now they allow more time to spend the funds and it is easier to get a loan completely forgiven.
How do you know if you qualify?
You are probably going to qualify. Small businesses, sole proprietorships, independent contractors, and self-employed individuals can all qualify.
Each of those categories will need to do a different request process but all of them can apply and qualify for the Paycheck Protection Program.
What do you need to know about this loan forgiveness?
You can get 100% of your loan forgiven if you meet certain criteria.
The funds can be used for:
- Payrolls. For example: salary, wage, vacation, parental, family, medical or sick leave, health benefits.
- Mortgage interest.
- Rent.
- Utilities
Most of the expenses that fall under those categories are eligible for forgiveness.
Of course, there are some conditions you will need to follow.
What are the conditions to get your loan forgiveness?
- Eligible expenses are those that are incurred over 24 weeks. For example, all the payroll you did during the 24 weeks is included.
- Make sure that at least 60% of your loan is going to be used for payroll costs. Payments to independent contractors should not be included in the payroll costs, for example.
- You must maintain the number of employees on your payroll.
- You must maintain at least 75% of the total salary. This requirement counts for every employee that did not receive more than $100,000 in 2019.
If you reduce your headcount or reduce the amount you pay to your workers, the forgiveness will not be for the total amount of the loan.

What happens if I am not approved for forgiveness?
You will be able to provide additional documents so your case can be reevaluated.
Otherwise, your outstanding balance will continue to accrue interest at 1%, for the remainder of the 5-year period.
How to apply for loan forgiveness?
In order to get forgiveness, you will need to complete a Forgiveness Application form and submit it.
The SBA is preparing for possible changes to forgiveness guidelines by Congress, so requests are not being received at the moment.
As you can see there are possibilities. You have possibilities and in times of crisis, we all need some extra help.
If you are thinking about applying for a process like this one, make sure to understand all the requirements and conditions. It is important to spend your time on things that are actually going to be helpful for your business and there might be some that actually don’t work in these cases.
At Terra Business Solutions we wish you the best with this situation that we are all going through. You are not alone, and if we can be helpful just schedule a call with us.
Look for the smartest ways to run your business and if the PPP loan forgiveness is a good choice, go for it. Never give up and be thankful that you have all those tools and help.