PPP Loan Forgiveness Guidance

The Paycheck Protection Program (or PPP) was part of the federal CARES Act to provide loans to businesses, big and small, to weather the storm through the pandemic. If your business was one of the recipients of the $240 billion that has been lent thus far, it’s time to start thinking about repayment or loan forgiveness.

Wondering if you qualify for loan forgiveness? Read on to learn more about PPP loan forgiveness guidance and whether you qualify. 

Loan Amount

If the loan you received was $150,000 or less, you can apply for loan forgiveness using a form provided by the Small Business Administration (SBA). The form asks you to verify the amount of your loan and to certify that you used all of the funds appropriately and within the PPP guidelines in place. Check out this article for more information on qualifications. 

PPP Loan Forgiveness Requirements

Another requirement for getting PPP loan forgiveness is to ensure that your funds were spent within the guidelines of the loan. Items that your loan dollars can be spent on include: 

  • Payroll
  • Rent (for leases signed before February 15, 2020)
  • Mortgage interest (for mortgages signed before February 15, 2020)
  • Utilities
  • Operating expenses, including HR, software, accounting needs, etc. 
  • Damages to property (due to protests and rioting in 2020, and as long as the expense wasn’t covered by insurance) 
  • Supply purchases
  • PPE to ensure that your business and employees are COVID compliant (masks, hand sanitizer stations, signage, etc.)

Additional Guidelines 

In addition to spending your PPP dollars on eligible expenses, there are other rules as well to qualify your loan for forgiveness. First, you must have spent at least 60% of your loan for payroll expenses. Payments to independent contractors, such as freelancers, do not count. The amount of your loan that will be forgiven will be proportionate to the percentage of your loan spent on payroll. 

You also must keep the same number of employees on your payroll. The intent behind these loans was to keep people employed, so you’ll need to demonstrate that you maintained your employees in order to qualify. 

In addition, the employees that you retain must be paid at least 75% of their total salary. You can’t retain the employee but drastically cut their salary and still qualify for forgiveness. 

Finally, the expenses that you incur and pay for with the loan must happen between the 8-24 week period that begins the day you receive your PPP funds from your specific lender. Your expenses and payroll during this time period is eligible for forgiveness, as long as you follow all guidelines and requirements. 

PPP Loan Forgiveness Guidance: Do You Qualify? 

Use this PPP loan forgiveness guidance to explore whether you and your business qualify for loan forgiveness. Keep in mind that even if you don’t meet the guidelines for full loan forgiveness, you still may have a percentage of your loan forgiven. 

If you found this article useful, be sure to check out some of our other business and finance articles before you go.