How to get SBA loan forgiveness
Relief programs like the Paycheck Protection Program and SBA loan forgiveness help many businesses nowadays. They’re the backbone of the United States economy, so they should receive assistance. See how your business can get aid today!
We’ll talk about the purpose of the Paycheck Protection Program (PPP) first. Then, we will talk about how the government may forgive this SBA loan. Later, we’ll go through the different alternatives for this small business loan.
If you’re not paying off loans, you could reallocate the debt payments for your business. That’s why SBA loan forgiveness is truly helpful for small businesses and the economy at large. Learn today how you can avail of this program.
What is the Paycheck Protection Program?
🛡️ #PaycheckProtection Program borrowers: Did you take out a loan of $150,000 or less? You may be eligible to apply for direct loan forgiveness through SBA's online portal!
— SBA (@SBAgov) August 16, 2021
Many businesses have closed due to the coronavirus lockdowns. Still, some of them struggle to keep operating. Providing a consistent payroll is one of the factors.
When a business reopens, it won’t make a profit right away. Most of their customers cannot buy more to keep it afloat. Others may not return because they lack money.
This will likely reduce earnings. As a result, it becomes difficult to keep paying employees. This is why the Small Business Administration launched the Paycheck Protection Program.
It provided two rounds of loans for businesses that met SBA standards. We say “provided” because you can’t apply anymore. This program ended on May 31, 2021.
If you received PPP loans, you might apply for SBA loan forgiveness. Start by checking the requirements. Each PPP loan has different requirements:
SBA loan forgiveness (1st PPP)
Your business should have met these requirements during the covered period. It lasted 8-24 weeks following loan disbursement:
- You retained the required number of employees.
- You paid the required amount to your employees.
- The loan went into payroll and other acceptable expenses.
- Around 60% of that amount went to payroll costs.
SBA loan forgiveness (2nd PPP)
The covered duration for this one is similar to the first round. PPP borrowers may get this loan forgiveness during 8-24 weeks after disbursement:
- Your business kept the required number of employees and the payroll required by the first PPP loan.
- You should have used the loan on payroll costs and qualified expenses.
- You paid at least 60% of that loan for payroll.
How do I get SBA loan forgiveness for PPP?
🛡️ #PaycheckProtection Program borrowers qualify for full loan forgiveness if:
☑️ Employee and compensation levels are maintained
☑️ Proceeds are spent on payroll costs and other eligible expenses; &
☑️ At least 60% of the proceeds are spent on payroll costs
Learn more: ⤵️
— SBA (@SBAgov) July 13, 2021
- Check your lender – It should be participating in direct SBA forgiveness. Open this link to see the list of lenders. See if you must apply via the SBA. Otherwise, you should apply through your lender.
- Prepare documents – You need payroll files like tax forms, bank account statements, payment receipts, and other files. What’s more, you need non-payroll files for supplier costs, rent payments, and others. Ask the SBA for further details.
- Submit requirements – Either your employer or the SBA should receive these files.
- Track your application – Forgiveness processing takes time. You will have to wait for the SBA or your lender to review your application.
You may contact the Small Business Administration’s forgiveness call center at 877-552-2692. It’s open from Monday to Friday, from 8:00 AM to 8:00 PM.
What if I don’t qualify for SBA loan forgiveness?
You have numerous alternatives in case you can’t get forgiveness for this SBA loan. Here are some details regarding each option:
- Economic Injury Disaster Loan – The EIDL specifically helps small businesses such as independent contractors and sole proprietors. What’s more, you may get a loan increase if you got your EIDL before April 7, 2021. If you qualify, the SBA may have sent you an email about this.
- Pandemic Unemployment Assistance – You may get sizable payments regularly from the PUA program. Also, self-employed people may qualify for this relief aid.
- Employee Retention Tax Credit – You may get these if you kept paying your employees, covered their COVID sick leave, or had to halt operations.
- Shuttered Venue Operators Grant – Some of the suitable venues include theaters, zoos, and museums. Applicants could receive up to 45% of their gross revenue that doesn’t exceed $10 million.
- Community Advantage Recovery Loan – This was made for new businesses and those found in low-to-moderate income communities.
- Express Bridge Loan – You may borrow up to $25,000 for a disaster-related issue. You may request it from a lender you’ve worked with before.
- SBA Microloan – This allows freelancers and sole proprietors to borrow up to $50,000. New ones provide six months of payments from the SBA.
- Small Business Development Centers – These places provide training and counseling for small businesses. What’s more, they could help you find grants. Every state has at least one center.
What if I have other business debts?
Many businesses were paying off other debts before COVID came. This is natural, though, especially for startups. They needed the money to get their business off the ground.
Sadly, many of them can’t pay these debts back. Instead of using the money to reopen, they’re giving it to lenders. What can you do, then?
You may perform the following debt reduction methods. They could lower your monthly payments or cut your remaining balance. Learn more about them below:
- Consolidation – This combines all your debts into one and gives it a low interest rate. In turn, you won’t have to pay as much every month.
- Settlement – Some companies could talk to your lender about lowering your debt. However, there’s a chance that they’ll fail. This is why you should get a lawyer who deals with this issue. They’ll guide you through the whole process.
- Credit Counseling – Certain agencies like the NFCC can guide you through paying off corporate debts. They have advisors that may speak with you regarding your debt reduction plans. Many of them are nonprofits too.
These relief programs are meant to help the US economy get back on its feet. It can’t just help businesses, though. That’s why individuals and families can get help too.
Contact the SBA for more information regarding these services. Its staff will show you the relief aid that suits your needs.
Learn more about SBA loan forgiveness
What is SBA loan forgiveness for PPP?
Some businesses may be allowed to stop repaying their SBA loans. In turn, they could use more of their money for more important costs. However, they will have to meet some requirements first. If you’d like to get SBA loan forgiveness, too, check its website for more information.
Can I use an SBA loan to pay off debt?
You may use an SBA loan for certain expenses, such as the payroll for your employees. The allowed expenses will depend on the type of business. Please check the SBA’s website for more details. It will show you where you’re allowed to spend your SBA loan.
Can my SBA COVID loan be forgiven?
The SBA may forgive your COVID loan if you meet their requirements. These will depend on the kind of loan you have right now. Applications have deadlines, though, so you have to request forgiveness as soon as you can. Visit the SBA website to learn more about SBA loan forgiveness.