PPP Loan Forgiveness.

Maximize your loan forgiveness with these resources.

Access information and answers to help you understand the PPP Loan Forgiveness process, stay on top of current guidance, and set yourself up for optimal loan forgiveness.

Frequently Asked Questions

When can I request loan forgiveness for a PPP loan?

Borrowers may apply for loan forgiveness following the end of their 8-week period or 24-week period. Borrowers have up to 10 months from the end of the last day of their covered period in which to apply for loan forgiveness.

Will I have to pay back my loan?

You will owe money for any amount of your original PPP loan not forgiven.

What will impact forgiveness?

The amount forgiven will be reduced if you do not maintain your staff and payroll.

  • Number of Staff: Your loan forgiveness will be reduced if you decrease your full-time employee headcount.
  • Level of Payroll: Your loan forgiveness will 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.
  • Rehiring: 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. If you offer to rehire and the employee declines, you will want written proof of both.
Will a borrower’s PPP loan forgiveness amount be reduced if the borrower laid off an employee, offered to rehire the same employee, but the employee declined the offer?

No. As an exercise of the Administrator’s and the Secretary’s authority under Section 1106(d)(6) of the CARES Act to prescribe regulations granting de minimis exemptions from the Act’s limits on loan forgiveness, SBA and Treasury intend to issue an interim final rule excluding laid-off employees whom the borrower offered to rehire (for the same salary/wages and same number of hours) from the CARES Act’s loan forgiveness reduction calculation. The interim final rule will specify that, to qualify for this exception, the borrower must have made a good faith written offer of rehire, and the employee’s rejection of that offer must be documented by the borrower. Employees and employers should be aware that employees who reject offers of re-employment may forfeit eligibility for continued unemployment compensation.

View the Loan Forgiveness Webinar here, and learn the most important tips to maximize your loan forgiveness.

Can you explain how forgiveness of the PPP loan works?

You will need to submit an application for forgiveness to your lender, including documentation verifying the number of full-time equivalent employees and pay rates for the 8-week or 24-week period commencing when the loan is made. The documentation should include payroll tax filings with the IRS, state and local income, payroll, and unemployment insurance filings, cancelled checks, payment receipts, or other documents verifying payments. You will need to certify that the documentation is true and correct and that the amount of the requested forgiveness was used for the permitted purposes. The amount forgiven will be reduced to the extent that there was a reduction in the number and/or salaries of employees, unless restored by June 30, 2020.

For individuals with self-employment income (such as an independent contractor or a sole proprietor) who file a Form 1040, Schedule C, please review the new interim final rule issued on April 2, 2020, by the SBA to understand what amounts shall be eligible for forgiveness.

View the Loan Forgiveness Webinar here, and learn the most important tips to maximize your loan forgiveness.

How should I track my PPP spending?

When you apply for forgiveness, you'll need to prove the number of full-time employees and an accounting of how the PPP money was spent. So, you'll likely need the following for the 8-week or 24-week period:

  • Payroll documentation;
  • Proof of mortgage payments;
  • Proof of rent payments; and
  • Proof of utility payments.

Some borrowers are setting up a separate account to hold PPP funding and pay only authorized expenses out of that account. This is a smart step, but likely unnecessary if you have good bookkeeping otherwise.

Are payments to independent contractors forgivable under PPP?

Payments to independent contractors will not be forgiven under the PPP. Only payments to employees are considered eligible payroll costs. When you applied for PPP, you were not allowed to include payments to contractors in your calculation, so this shouldn't throw off your math.

What happens if my PPP loan is not forgiven?

If your loan is not forgiven, the terms are 1% interest and must be paid back in two years for loans received before June 5th unless your bank or borrower agrees to extend it for up to five years. Payback term is five years for loans received after June 5th. These are great terms for a business loan. There may be an amount that is not forgivable. In that case you have may repay immediately or within the two or five-year term.

What is my risk of the SBA reviewing / auditing my company for taking PPP funding?

If your loan amount is under $2 million, you do not have to fear an SBA audit, thanks to the SBA and Treasury safe harbor rule.

Still have questions? If you need more information or would like a hand navigating the PPP Loan Forgiveness process, our partners at Loyalty Brands* can connect you with an industry expert for more details. Learn how to register for a consultation with a PPP loan expert.

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