HOW DO I GET MY CARES LOAN FORGIVEN BY THE SBA?

BY MICHAEL RASMUSSEN

QIs my SBA loan through the CARES Act forgivable? And what do I need to do to stay compliant with federal requirements governing my loan?

AYes, the loan is forgivable if you follow the actual intent of the law and interpretations that have been subsequently provided. According to a summary of the interim final rule issued by the Small Business Administration on April 2, the CARES Act “is designed to encourage eligible employers to keep employees on their payroll, despite experiencing economic hardship related to COVID-19. The CARES Act temporarily adds a new product, titled the Paycheck Protection Program, that provides for forgiveness of up to the full principal amount of qualifying loans guaranteed under the Paycheck Protection Program.”

The first thing to remember is that the amount of the loan forgiveness may extend to the full amount of the loan plus interest. The total amount of forgiveness will depend on the amount of your pizzeria’s payroll costs, payments of interest on mortgage obligations, rent or lease payments, and utility payments that were generated on contracts or services in effect as of February 15, 2020.

Don’t attempt to skirt the system. Guidance issued by the SBA mandates that no more than 25% of the above costs can be figured into your total loan forgiveness under this program. The true intent of the Paycheck Protection Program is to ensure that you keep your employees on the payroll. The SBA specifically states, “If you knowingly use the funds for unauthorized purposes, you will be subject to additional liability, such as charges for fraud.”

Secondly, if you receive a loan under this program, you will have eight weeks from the date the money arrives in your bank account to inform the bank and/or the SBA how these loan funds were disbursed. It’s crucial to maintain separate checking accounts and accounting for every expenditure. This is the time to get disciplined in your record keeping!