LAS VEGAS (KTNV) — As more money flows from the Paycheck Protection Program and the government sets new guidelines, a lot of small business owners have unanswered questions. One of the biggest ones -- will the loan be forgiven?
Small business owners and lenders are eager to understand how to ensure those loans won't need to be paid back. To do that, business owners need to complete this application form and submit it to their lender.
Business owners are eligible for full loan forgiveness if the funds are used on payroll costs, interest payments on mortgages, rent on any lease and utility payments.
Because of the high demand for the PPP loans, 75% of the forgiven amount must be used for payroll costs.
Loan forgiveness is also based on the employer maintaining or rehiring employees and maintaining wage levels by June 30th.
The amount forgiven will be reduced if you decrease your full-time employees or if you cut their paychecks beyond 25% of their prior year pay.
Before you fill out the loan forgiveness application, local financial professional Brad Zucker from Safe Money Advisors has a warning. "You have to use the money for the specific guidelines that are set out by the program if you fail to do that this is going to result in taxation to the business owner and will limit and any type of tax deductions once you receive the money so always seek legal guidance before you do any type of loan through the program."
Zucker adds, "Under the loan forgiveness there is a covered period, which is generally about 8 weeks... some of the expenses that are under the forgiveness program are going to include the payroll. However if you have full-time employees at the time of the application and during that covered period you have to lay off people or completely terminate them there's going to be a again consequences to that and depending on the amount of money that you received from the program it could result in an audit."
Entrepreneurs who took the loan should keep every document so they have a paper trail of how they used the loan especially as guidance from federal authorities continues to evolve.