You have gotten a Paycheck Protection Program (PPP) loan, but you now want to make sure you maximize the forgiveness essentially turning the loan into a grant. How do you make sure that happens? Well here is a guide to help you sort through it! (For the purposes of this post the rest of the article is assuming you are trying to maximize the forgiveness of the loan).
To understand and make sense of how PPP forgiveness works it is important to understand the purpose of the PPP, which is to keep workers employed at their full pay. It is not directly meant to help businesses stay afloat which is why there are restraints on how the money can be spent. Hence the name, Paycheck Protection. The idea being workers do not have to go on unemployment and that when things hopefully open back up businesses still have their employees and can scale back to “normal” operations. So, the goal is to pay your employees even if there is no work at all for them to do whether the lack of work is due to slow business or workers not being able to leave the house as a result of state or local mandates.
Here are five important highlights regarding PPP forgiveness with the new 24-week covered period (assumption is that everyone will switch since it is more favorable):