Terms of Loan Forgiveness (Sec.1106)
Loan recipients will be eligible for loan forgiveness for an 8-week to 24 week period after the loan’s origination date in the amount equal to the sum of the following costs incurred during that period:
Payroll costs (capped at $100,000 on an annual basis for each employee)
Payment of interest on mortgage obligation
SBA and Treasury guidance suggests not more than 25 percent of the forgiven loan amount may be used for non-payroll costs. If a business took out a SBA Economic Injury Disaster Loan (EIDL) related to COVID-19 between January 31 and April 3, 2020, the borrower may refinance the loan under this program and receive loan forgiveness benefits on the refinanced amount. The amount forgiven cannot exceed the amount borrowed. Loan forgiveness will be proportionally reduced if the average number of employees is reduced during the covered period as compared to the same period in 2019. The amount of loan forgiveness will be reduced by the amount of any reduction in total employee salary or wages during the covered period that is in excess of 25 percent of the total salary or wages.
Payroll documentation and documentation of expenses are required to receive forgiveness, to ensure the forgiveness was used to retain employees and pay expenses
Borrowers that rehire laid off workers by June 30 won’t be penalized for having a smaller workforce at the beginning of the period
Borrowers with tipped workers may receive loan forgiveness for the additional wages paid to those employees.
Lenders have 60 days to issue a decision on the application. The canceled loan amount will not count towards gross income for tax purposes.