9/22/21 UPDATE: It has come to IHRSA’s attention that some lenders are informing applicants that these safe harbors are insufficiently clear. IHRSA is seeking further clarification from the SBA at this time.
If you were one of the gyms, health clubs, or studios fortunate enough to receive a Payroll Protection Program (PPP) loan in the first round of PPP back in the spring of 2020, you are probably getting ready to file your application for loan forgiveness. If you, like many other gyms, clubs, and studios, particularly those in California, New Jersey, New York, North Carolina, Oregon, and Washington, were closed by state mandate or operating under severe capacity restrictions during the period of this PPP loan, you may be concerned about meeting the requirement that 60% of your loan be spent on payroll to qualify for full forgiveness.
Paycheck Protection Program (PPP) Loan Forgiveness Solutions
IHRSA has been working with operators facing this challenge for months, seeking to clarify the requirements around forgiveness. We are pleased to report two potential solutions for operators who find themselves struggling to meet the requirements for full forgiveness of their PPP loans.
The Small Business Administration (SBA) has provided two “safe harbors” for businesses that could not meet the 60% spent on payroll requirement. What is a “safe harbor”? A safe harbor is a legal provision that allows you to sidestep or eliminate legal liability in certain situations, provided that certain conditions are met. In this case, the safe harbors are a set of requirements, that if you fit into, you will be excused from the 60% spent on payroll requirement for loan forgiveness.