PPP LOAN FORGIVENESS FAQS

If you received a PPP loan, you likely have questions regarding forgiveness of your loan. Please review the FAQ's below and check back often. We will update this page if any new legislation related to the CARES Act is passed, and/or as new guidance from the SBA is released.

Are ppp loans eligible for loan forgiveness?

Yes, PPP loans are eligible for loan forgiveness - meaning you have no responsibility to repay the loan as long as the funds are used for certain business expenses. It's also possible to receive forgiveness for a percentage of the loan vs. the entire loan amount. See "Is it possible to have some of my loan forgiven, but not all?"

What Business expenses qualify for forgiveness?

To qualify for loan forgiveness, PPP funds must be used for the following expenses, and they must have been billed or incurred in the 8-week or 24-week period (the "covered" period) from the date you received your loan funds (disbursement date):

At least 60% of the funds must be spent on payroll costs, including employee benefits
No more that 40% of the funds can be spent on:
- Interest on mortgage obligations, where the mortgage obligations originated before February 15, 2020
- Rent, under lease agreements in force before February 15, 2020
- Certain utilities, for which service began before February 15, 2020

What counts as payroll costs?

Payroll costs include:

Salary, wages, commissions, or tips (capped at $100,000 on an annualized basis for each employee).
Employee benefits, including costs for vacation, parental, family, medical, or sick leave; allowance for separation or dismissal; payments required for the provisions of group health care benefits, including insurance premiums; and payment of any retirement benefit.
State and local taxes assessed on compensation of employees.
For a sole proprietor or independent contractor: wages, commissions, income, or net earnings from self-employment, capped at $100,000 on an annualized basis for each employee.

is it possible that some of my loan my be forgiven, but not all?

Yes. You will owe money when your loan is due if you use the loan amount for anything other than payroll costs, mortgage interest, rent, and utilities payments over the 24 weeks triggered after you received the loan. Payroll costs must represent at least 60% or the forgiveness amount.

You may also owe money if you do not maintain your staff and payroll, such as:

Your loan forgiveness may be reduced if you decrease your full-time employee headcount.
Your loan forgiveness may also be reduced if you decrease salaries and wages by more than 25% for any employee that made less than $100,000 annualized in 2019.
You may be able to avoid a reduction in forgiveness if you restore your full-time employment and salary levels by December 31, 2020. You may also be able to avoid a reduction in forgiveness if you can document an inability to return to your standard level of business activity due to compliance with COVID-19 requirements or guidance issued by the Centers for Disease Control (CDC) or other specific federal entities.

some of my employees voluntarily resigned, requested a reduction in hours or were fired for cause. Do these situations count as fte reduction?

No. You do not need to include employees who voluntarily resigned, requested reduced hours, or were fired for cause in your wage reduction calculation, provided you retain supporting documentation. You can also exclude employees who were fired or furloughed if you made a good-faith, written offer to rehire that was rejected by the employee. You may also be able to avoid a reduction in forgiveness if you can document an inability to return to your standard level of business activity due to compliance with COVID-19 requirements or guidance issued by the Centers for Disease Control (CDC) or other specific federal entities.

What happens to loan proceeds that are not forgiven?

Proceeds that are not forgiven must be repaid pursuant to your promissory note, and can only be spent on the following:

At least 60% of the loan proceeds must be used for payroll costs.
The remaining 40% of loan proceeds may be used for the following, provided that each of these expenses were in place before February 15, 2020 :

Mortgage interest payments (but not mortgage prepayments or principal payments);
Rent payments;
Utility payments;
Interest payments on any other debt obligations that were incurred before February 15, 2020

If you use PPP funds for unauthorized purposes, SBA will direct you to repay those amounts. If you knowingly use the funds for unauthorized purposes, you could be subject to additional liability such as charges for fraud.

How do I apply for loan forgiveness?

We are developing a streamlined version of the forgiveness application. Once we are prepared to accept your application for loan forgiveness, we will contact you.

should my company's forgiveness application be submitted by the same employee who submitted my company's ppp application?

An authorized representative of your business is required to sign the forgiveness application.

What other resources are available to help with my forgiveness application?

There are many resources available to help you prepare your forgiveness application. We recommend that you refer to sba.gov and treasury.gov for additional information. You may also want to discuss your application with your CPA. We'll send an invitation soon for you to begin the application process, which will help determine which application form you need to complete (Form 3508EZ or the Form 3508). If you determine that your business will need to complete the Form 3508 application, we've developed a calculator to aid in the completion of this more complex application. You may access the calculator here in Excel and PDF formats.

do i need to make payments on my ppp loan after I submit my forgiveness application?

If you apply for forgiveness within 10 months of your covered period, your loan payments may be deferred until the date the SBA sends your forgiveness payment. Interest will continue to accrue at a rate of 1% during this period.

What if the sba declines my forgiveness application in all or in part?

You will be notified if the SBA determines that all or part of your loan is not forgivable. If you do not agree with the SBA’s determination, you may appeal the decision. The SBA will provide more information on the appeal process soon. You will be required to start repaying any portion of your PPP loan that is not forgiven. The loan term will be two years (or five years for loans originated after June 5, 2020) with a 1% interest rate. There is no prepayment penalty.