Federal loan forgiveness details

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Michael Hosto

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Joined Mar 21, 2020
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Small businesses reeling from the impact of coronavirus may have good news coming in the form of loan forgiveness.
The $2 trillion federal stimulus package includes $350 billion in loans backed by the U.S. Small Business Administration, some of which will be forgiven depending on a company's circumstances. That's according to Neil Bradley, executive vice president and chief policy officer at the U.S. Chamber of Commerce. Bradley was speaking at the National Small Business Town Hall, a live webinar hosted by Inc. and the Chamber on Friday.

The SBA's paycheck protection loan program is "really more of a loan that converts to a grant," Bradley said. Small businesses with fewer than 500 employees qualify, as will some larger companies. The program is aimed at helping businesses maintain their payroll during the significant business disruption caused by the coronavirus crisis.
Here's how the loan forgiveness works:
  • Your company's expenses for the eight-week period after the origination of the loan will be analyzed.
  • Every dollar your company spent on payroll, utilities, rent, or interest on mortgage debt will be added together. That amount will be forgiven, up to the total amount your company borrowed through the program.
There is one caveat, however. The amount that is forgiven will be reduced for businesses that lay off employees during the first eight weeks following the loan. Companies that reduce wages of employees who make less than $100,000 per year by 25 percent or more will also have the forgivable amount reduced.
The good news is that businesses that have already let employees go before accepting the loan will not be subject to such penalties. And if those businesses rehire employees after accepting the loan, they'll receive additional credit to cover their wages.

Related: Small Businesses Could Land SBA Loans in as Soon as 2 Weeks. Here's Who's Eligible















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$2 Trillion Stimulus 2020: Video Q&A
PUBLISHED ON: MAR 27, 2020


CASH FLOW
Financial Assistance Tracker for Businesses

Governments are making unprecedented moves to help small businesses amid the Covid-19 crisis. Find out about the resources that may be available to you.
By Inc. staff



An empty coffee shop in New York City.
GETTY IMAGES
Note: This post will be continually updated as additional resources become available.
Business owners are reeling as the Covid-19 disruptions to daily life hit an increasing number of locales. Governments are scrambling to marshal resources to offer assistance to those taking a hit.
Here's a rundown of programs available as of Friday, March 27.
Go to full article




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