Businesses may use the loan proceeds for:
Includes: salary, wage, commission, or similar compensation; payment of cash tip or equivalent; payment for vacation, parental, family, medical or sick leave; compensation for dismissal or separation; payment required for the provision of group health care benefits, including insurance premiums; payment of retirement benefits; or payment of state or local tax assesses on the compensation of employees; and compensation to sole proprietors or independent contractors (including commission-based compensation) up to $100,000 in 1 year, prorated for the covered period;
Excludes: individual employee compensation above $100,000 per year, prorated for the covered period; taxes imposed or withheld under FICA (Social Security and Medicare), Railroad Retirement Act, and IRC Chapter 24; compensation to employees whose principal place of residence is outside of the U.S.; and qualified sick leave or family leave wages for which a credit is allowed under the Families First Coronavirus Response Act.
Eligible recipient can use the proceeds from the loan for:
-Costs related to the continuation of group health care benefits during periods of paid sick, medical, or family leave, and insurance premiums;
-Employee salaries, commission, or similar compensations;
-Payments of interest on any mortgage obligation (excludes prepayment);
-Rent (including rent under a lease agreement);
-Interest on any other debt obligation that were incurred before the covered period.
Amount of Forgiveness.
A borrower will be eligible for loan forgiveness equal to the amount spent by the borrower during an 8-week period after the origination date of the loan on payroll costs, including benefits capped at $100,000 per employee, interest payment on any mortgage incurred prior to February 15, 2020, payment of rent on any lease in force prior to February 15, 2020, and payment on any utility for which service began before February 15, 2020.
Rehire/Restoration Exception: You have until June 30, 2020, to restore your full-time employment and salary levels for any changes made between February 15, 2020, and April 26, 2020 to eliminate these forgiveness reductions.
Due to high subscription rates, it is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs.
Not Taxable Income for Federal Income Tax Purposes. The portions of COVID-19 Paycheck Protection Program loans that are forgiven in accordance with the CARES Act are excluded from gross income for federal taxation purposes of each applicable borrower.
No Guarantee: Between February 15, 2020 and ending on June 30, 2020, no personal guarantee is required for the covered loan AND no collateral is required for the covered loan.
No prepayment penalty.
Nonrecourse: The administration has no recourse against any individual, shareholder, member, or partner of an eligible loan recipient for non-payment, UNLESS loan proceeds are used for unauthorized purposes.
No Fees: Between February 15, 2020 and ending on June 30, 2020, with respect to covered loan, the Borrower and Lender Fees usually payable under an SBA Loan are now waived.