The PPP program provides an opportunity for complete loan forgiveness, if the PPP loan proceeds are spent on qualified expenses. Qualified expenses are defined as:
The forgiven amount cannot exceed the principle amount of the PPP loan.
According to what we know today, the following are considered eligible use of funds that qualify for loan forgiveness:
For a business payroll costs are payments to employees that are:
Any interest on indebtedness incurred in the ordinary course of business before February 15, 2020. Principal payments or prepayments are not qualified expenses.
Any payments of rent under a leasing agreement in force before February 15, 2020.
Tip: Borrowers who have been approved for PPP loans should consider waiting at least until the expected SBA guidance comes out before entering into new lease arrangements. Businesses should maintain adequate records of rent payments.
Utilities include electricity, gas, water, transportation,telephone, or internet access for which service began before February 15, 2020.