SBA Amends Rules Governing the Paycheck Protection Program To Allow Small Businesses To Qualify For Partial Loan Forgiveness
Published by
Laura Sprouse
on
JUNE 12, 2020
The Small Business Administration amended its rules governing the Paycheck Protection Program to allow small businesses to qualify for partial loan forgiveness even if 60% of the government-financed loan wasn’t directed toward loan forgiveness. The SBA issued the new rule on Thursday. It’s set to make partial loan forgiveness available to vastly more small businesses that don’t spend the majority of their cash on workers’ paychecks. Instead, 60% of the amount eventually forgiven should go toward payroll, the SBA said.
The SBA offered an example: If a borrower received a $100,000 loan and spent $54,000 of its loan on payroll, the maximum amount of forgiveness that an individual could receive is $90,000, according to the SBA; in that scenario, $54,000 in payroll costs accounts for 60 percent of the forgiveness amount, and $36,000 in non-payroll costs constitutes 40 percent of the forgiveness amount.