You Will Be Forgiven.
The Easy Path to Loan Forgiveness (We Have a Free PPP Expense Organizer and Calculator for You!)
Here’s something you don’t see every day—a creative agency giving financial advice. But hey, strange times, right? If you’re a business owner, you’re probably aware that the SBA announced it had exhausted its PPP loan funding. But the President and Congress are finalizing an additional $310B in funding to help small businesses keep workers employed during this unprecedented time. That’s great news.
As a fellow small business, we have had dozens of conversations with our clients about the PPP loan and what can be forgiven as a part of the program. Simply put, monies loaned from the program that are paid out within the first two months (eight weeks) for payroll costs, mortgage interest payments, rent, utility, interest payments on debt incurred prior to February 15, 2020 can be forgiven by the government. Hooray! BUT—what is included in “payroll costs” and what exactly does that mean?
Here’s the brief synopsis that we received from Sherri Neasham at Navix. “Payroll costs” generally mean the following compensation elements for employees (not any independent contractors) whose principal place of residence is in the US:
- Salary, wage, commission, or similar compensation for any employee whose principal place of residence is in the U.S. (capped at $100,000 on an annualized basis for each employee)
- Cash tips or equivalents
- Payment for vacation, parental, family, medical, or sick leave
- Allowance for dismissal or separation
- Payment required for the provision of group healthcare benefits, including insurance premiums
- Payment of any retirement benefit
- Payment of state and local taxes assessed in connection with the foregoing
The PPP loans are essential to keep businesses running and employees employed right now. But it can be tough to keep up with the numbers and ensure you’re making the right moves to receive loan forgiveness. But—more good news: Thanks to our good friend from the Entrepreneurs Organization Matt Rinkey at Illumination Wealth, there’s an easy way to calculate your PPP expenses: The PPP Loan Expense Organizer & Forgiveness Calculator. If you would like to use the calculator—free of charge of course—just email us and we will send you the file.
Big thanks to Sherri and Matt for sharing this info with us—and you. Let’s keep this economy running.
– The JT Team