We’ve been surveying our customers on a weekly basis to understand the impact of COVID-19 on our community. Our survey results indicate that over 65% of Faire retailers and brands applied for the Economic Injury Disaster Loan (EIDL), Paycheck Protection Program (PPP), or both. In May, over 50% of respondents received a full or partial loan.
If you’ve received funding, now is the time to start thinking about loan forgiveness.
On May 15, the SBA released new information regarding PPP loan forgiveness, so we’ve laid out the most relevant information for you here. Additional guidance may be coming, and we will keep you updated as we learn more.
What is the application process?
Lenders are now accepting loan forgiveness applications. Your lender has 60 days from your application submission date to make a decision, so it’s in your best interest to submit a thorough and thoughtful application.
When completing the application, you’ll need to compile the following information from before February 15, 2020:
Please note that even if you receive loan forgiveness, you may still have to pay taxes on the amount you received. We recommend speaking with your tax advisor to navigate this.
Which expenses are eligible for PPP loan forgiveness?
At least 75% of your PPP loan needs to be used for payroll costs in order to qualify for loan forgiveness. Here’s what you need to know about eligibility:
On the other hand, up to 25% of loan forgiveness can cover non-payroll costs that were in place before February 15, 2020. Eligible non-payroll costs include the following expenses:
How much time do I have to use this loan in order to qualify for loan forgiveness?
Initially, it was announced that borrowers have eight weeks from the loan disbursement date to use their funding. However, the SBA’s May 15 guideline clarifies what can be done for expenses that are scheduled to be paid after that “covered period.”
What happens if my expenses do not qualify for loan forgiveness?
It is possible that a portion of your loan is not eligible for loan forgiveness. If you need to pay back your loan, here’s what you need to know:
Alternatively, please reach out to your lender if you do not wish to use the PPP loan you have received. There is no prepayment penalty if you pay back these loans early.
What happens if I receive both a PPP and an EIDL advance?
Small business owners in the U.S. can apply for an EIDL advance of up to $10,000. This advance is different from the PPP loan in that it will not have to be repaid and can be used to cover all business-related operating costs.
If you receive an EIDL advance and a PPP loan, you may need to refinance your funding together.