Supporting Small Businesses When it Matters Most

What Expenses are Covered

In order to be eligible for full loan forgiveness, at least 60% of your loan amount must be spent on payroll costs:

• Payroll costs include: payments to employees in the form of salary/wages/commissions/tips; payment for vacation/parental/family/medical or sick leave; allowance for separation or dismissal; payment for employee benefits consisting of group health care/life/disability/vision/or dental insurance payment or premiums; retirement; and payment of state and local taxes assessed on compensation of employees
• For a sole proprietor or independent contractor with no employees, payroll costs include: wages, commissions, income, or net earnings from self-employment

Once this payroll cost requirement is met, the loan amount is further eligible for forgiveness to the extent spent on Eligible Non-Payroll Expenses, including:

• Business rent, utilities, or interest on mortgage obligations relating to services incurred or arising under an agreement executed before February 15, 2020
• Certain operational expenditures for business software, cloud computing, other human resources and accounting needs
• Costs related to property damage, excluding residential property damage, due to public disturbances that occurred during 2020 that was not covered by insurance
• Supplier costs pursuant to a contract for goods in effect prior to taking out the loan that were essential to the borrower's operations at the time at which the expenditure was made
• Personal protective equipment and adaptive investments to comply with health and safety guidelines related to COVID-19
• Other expenses may qualify towards your loan forgiveness amount. Please refer to sba.gov/ppp
• Note: If you use less than 60% of your loan amount for eligible payroll costs, you will be eligible for partial loan forgiveness based on the amount of your loan used for such costs divided by 60% of your loan amount

Covered Period:

• Eligible expenses must be incurred or spent during a period of between 8 and 24 weeks following the funding of the loan

What are the Payroll Requirements

If you are using Form 3508 or Form 3508EZ to maximize your loan eligibility for forgiveness, you had until December 31, 2020 (or, if you filed after December 27, 2020, until the last day of your covered period) to:

• Restore your full-time employee level to offset any staff reductions that occurred between February 15, 2020 and April 26, 2020, or demonstrate and document your best faith efforts to retain employees during that time period.
• Restore salaries and wages that were reduced more than 25% during a covered period between 8 and 24 weeks that applies to your loan as compared to the most recent full quarter before the covered period.
• Generally, if you are using Form 3508S and your loan amount is $50,000 or less, you are exempt from any reductions in the borrower's loan forgiveness amount based on reductions in full-time equivalent (FTE) employees or reductions in employee salary or wages that would otherwise apply.
• Please see the FAQF A Q section for more information, including detailed provisions pertaining to Form 3508S and Form 3508EZ.

PPP Loan Forgiveness Example Scenarios

After the SBA provides a final decision on your loan forgiveness application, your loan's principal amount will be calculated as the original loan amount less any amount forgiven by the SBA based on expenses that qualified for loan forgiveness.

If you apply for loan forgiveness before the end of the tenth month following your covered period, you will not have to start making payments until the SBA makes a decision on your loan forgiveness application.