PPP Loan Forgiveness Information


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PPP Loan Forgiveness Information
Written By: June Bachman ~ 5/16/2020 9:00:00 AM


NOTE: Things are changing often, and the PPP is a moving target. This information was accurate as of May 13, 2020.

If you received a Payroll Protection Program loan from the government, you will need to carefully review the Loan Forgiveness information to ensure you take full advantage of your forgiveness opportunities. The SBA has released the Loan Forgiveness Application, which also includes instructions for applying for loan forgiveness.


Things to understand about the PPP Loan Forgiveness process:

All borrowers must certify in good faith that current economic uncertainly makes the PPP loan request necessary to support the ongoing operations of the applicant.

  • For applicants that borrowed less than $2 million, it is assumed you made the loan in good faith. Audits may occur for loans in excess of $2 million.

How can the PPP loan funds be used, to be eligible for loan forgiveness?

  • Funds must be used within an eight-week (56 days) period of time. The time period begins with the deposit of funds into your bank account.
  • At least 75% of the loan amount must be used for payroll. Applicants are required to maintain employee headcount. Payroll expenses can include:
    • Wages
    • Salary
    • Commissions
    • Tips
    • Vacation
    • Parental and family leave
    • Group health care
    • Retirement benefits
  • No more than 25% can be used for non-payroll expenses. Non-payroll expenses may include:
    • Interest rates on mortgages
    • Rent on location
    • RENT may include: rent on equipment, office equipment
    • LEASES may include: leased equipment
    • Utilities
    • Cell phones, telephones, internet, water, gas, electric

What is the PPP Loan Forgiveness process?

  • Recipients of funds will need to complete the Loan Forgiveness Application, and submit it to the lender.
    • The loan forgiveness application must be submitted within 90 days of the end of your eight weeks.
    • The lender will approve/deny forgiveness funds within 60 days of receiving the loan forgiveness application.

How to document on what you spent the PPP loan funds.

  • Keep detailed records of all PPP loan funds spent.
    • Track all expenses as the funds are used.
  • Deposit the PPP loan funds into a separate bank account.
    • Pay expenses directly from the PPP bank account.
    • You may wish to create invoices in your accounting program to line item the expenses, and then transfer the funds from your PPP bank account into your regular business checking account.

When employees you try to hire back say no … they may still be counted as FTEs.

  • If you have a documented process that you offered a furloughed employee the opportunity to return to work, and the employee either told you no, or you documented the attempt to provide the job, you may count that employee in your FTE total.
    • Additionally, employees who fail to return to work, and not disclose that information truthfully to Employment Security are at risk for potentially losing their unemployment benefits.

Final Thoughts

  • Conduct your business like you normally do – unless otherwise guided by the SBA and/or the government.
    • For example, if you normally do not give bonuses during this time of year, then don’t give bonuses with PPP funds.
  • Don’t try to game the system.
    • Don’t put your kids on the payroll, etc.

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