The CARES Act was enacted to help the economy through the current COVID-19 pandemic. As part of the CARES Act, the Paycheck Protection Program was meant to help support small businesses by providing a potentially forgivable loan that can be used to pay continuing payroll and other obligations during the pandemic.
What makes the Paycheck Protection Program loan forgivable?
For those who receive a loan under the Paycheck Protection Program, the question of how to use the funds typically comes up. Borrowers may be able to have the full loan amount forgiven if the funds are used for payroll costs. Specifically, at least 75% of the loan must be used for payroll purposes. There are a few ways to ensure you’re eligible for loan forgiveness.
Steps for Loan Forgiveness
First things first: the moment you receive the loan, set the funds aside in a separate account dedicated solely to the loan. Whether you have to open a new account or use an existing checking or savings account, put the money in a separate account solely for those funds. The purpose being, it allows you to track how the money will be used. When we’re applying for loan forgiveness we’re going to have to show how the money was allocated.
Check out the rest of the tips for when you receive a loan under the Paycheck Protection Program on this week’s All Up In Yo Business. And be sure to subscribe to our YouTube channel for more All Up In Yo’ Business!
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