PPP Loan Forgiveness Guidance Updated with the

PPPFA Regulations as of June 17, 2020

Application Sections for Revised Loan Forgiveness Application

  1. Calculation
  2. Certifications
  3. PPP Schedule A
  4. For Preparation of Form 1 and 2 – PPP Schedule A Worksheet
  5. Optional – Demographic Information Form

Highlights of New Guidance

  • Covered Period – the Borrower may elect between
    •  the 8-week period of time after the loan disbursement or 
    • 24 weeks after the loan disbursement or 
    • If you have a bi-weekly or weekly payroll schedule, you can elect to start your Covered Period starting on the first date of your payroll period following loan disbursement date

Whichever Covered Period is selected, the Borrower must use this Covered Period throughout its Loan Forgiveness calculations and application. 

  • Designation for loans over $2million and includes funds received by affiliates. 
  • Payroll costs 
    • Includes wages paid to the employee and those wages earned during the Covered Period so long as paid in the next normal payroll period following this period. 
    • State and local taxes must be paid during the Covered Period to be included in forgiveness. 
  • Business costs calculation includes utility costs paid during the Covered Period and those costs incurred during that period of time so long as paid on or before their normal billing date. 
  • Exemptions to reduction calculations so long as restored prior to December 31, 2020. 
  • Exemptions to reduction calculations for resignations, terminations for cause and requests for reduction in hours.
  • Exemptions to reduction calculations for diminished business operations due to OSHA, CDC and DHH COVID-19 safety and sanitation regulations enacted after March 1, 2020 but before December 31, 2020
  • Additional certifications regarding accuracy of records and consent for tax information to be disclosed to Inspector General for review.
  • Demographical information form but is optional. 

If Standard Loan Application: 

On the Calculation Loan:

  1. Enter business information that was used in application. Enter loan number from SBA and from Lender. Enter Loan amount. 
  2. Total number of Employees at time of Loan Application. 
  3. Total number of Employees at time of Forgiveness Application. 
  4. Loan disbursement date from Lender. If multiple dates, enter first date receiving proceeds. 
  5. EIDL advance amount and application number. This will be deducted by the SBA when the application was remitted to the Lender. 
  6. Select payroll schedule. 
  7. Calculate and enter Covered Period.
  8. If $2million dollar loan or greater, check box. Includes loan amounts taken by affiliates.

Calculate all eligible forgiven amounts during covered period: 

  • Eligible payroll costs, 60% or greater 
    • Payroll costs to be included are wages (1) paid by check or ACH or (2) earned during the cover period so long as the wages are paid in the following pay period. 
    • The Payroll costs for each employee during the covered period cannot exceed the pro-rata rate of $100,000 ($15,385 for the 8-week covered period or $46,154 for the 24-week covered period). 
    • Owner or self-employed individual wages – 
      • For the 8-week covered period: the lower of (a) 2019’s 8-week compensation or (b) compensation during covered period up to $15,385. 
      • For the 24-week covered period: the lower of (a) 2.5 times the 2019 net profit or (b) $20,833
    • Employer contributions to employee health insurance costs without employee’s contribution amounts.
    • Employer contributions to employee’s retirement plans without employee’s contribution amounts.
    • Payroll related state and local taxes paid by the Borrower during the covered period.  
  • Business Expenses – costs during the covered period must be (1) paid or (2) incurred if paid on or before the next regular billing date. Cannot exceed 40% of the forgiveness amount. 
    • Business mortgage interest payments. Does not include pre-pay interest nor any principal payments. 
    • Business rent and lease payments for real or personal property.
    • Business utility payments (electricity, gas, water, transportation, telephone and internet access). 

Additional Certifications 

  • All documentation for these calculations should be sent to the Lender. All documents are accurate. Additional documentation may be requested from the applicant to evaluate eligibility for forgiveness. 
  • All tax documents should be those consistent with the forms that will be submitted to the IRS. The SBA reserved the right to turn over the tax documents to the Inspector General to ensure compliance with the PPP loan regulations. 

Reduction Formulas

  • Reduction in Work-Force: [average FTE during period v. average FTE during cover period] —  if reduction during covered period, reduction in forgiveness unless exemption applies. 
    • Period is either (1) Feb 15, 2019 to June 30, 2019; (ii) Jan 1, 2020 to Feb 29, 2020. 
    • Average FTE: [average number of hours paid per week / 40] = round to nearest tenth. 
    • Safe Harbor 1: if employer reduced FTE during Feb 15, 2020 through April 26, 2020 and restores FTE amount no later than December 31, 2020, no reduction to forgiveness will apply.  
  • Reduction in Salary/Wages: [salary during cover period / salary during Jan. 1, 2020 to march 31, 2020] — if greater than 25% then forgiveness reduced unless exemption applies. 
    •  [average salary during Jan 2020 – March 2020] * 0.75 – salary during covered period] = [reduction in salary] *8 = [reduction during cover period] /52
    • Exemption – FTE Safe Harbor: [salary as of Feb. 15, 2020 v. average salary from Feb. 15 to April 26, 2020]. 
      • If average salary from Feb 15 to April 26 is greater or equal to salary as of Feb. 15, 2020, then  enter 0. 
      • If average salary from Feb 15 to April 26 is less than to salary of Feb. 15, 2020 then, compare to salary as of June 30,2020. If June 2020 salary greater than or equal to Feb 15 salary – Safe harbor applies, enter 0.
  • Exemption – Good faith effort to rehire an employee during the covered period. 
    • Offer must be written and made in good faith and the employee must have rejected offer.
  • Exemption – Employees (a) voluntarily requested resignation or (b) reduced hours or (c.) fired for cause. 
    • Employee must have voluntarily requested and received reduced hours. 
    • Positions should be counted in average FTE during covered period if NOT filled by another individual. 
  • Exemptions from PPPFA – Good faith demonstration that Borrower could not avoid reduction in workforce
    • Borrower must document that (1) it was unable to rehire Employees who were subjects to layoffs and reductions and (2) that it could not fill those opens positions with similarly qualified employees before December 31, 2020. Or,
    • Borrower must document that the reduction in workforce was due to the inability to return to the same level of business activities before February 15, 2020 due to CDC, OSHA, or DHH regulations for safety and sanitation related to COVID-19 which were effective between March 1, 2020 through to December 31, 2020. 


To Submit:

  • Payroll records for wages, payroll tax filings for IRS (Form 941) and State, statements for health insurance and retirement plan payments paid or incurred during covered period.
  • Average number of FTE for covered period and elected period of time. 
  • Paid and incurred costs for business operating expenses for mortgage interest, rent and utilities. 

To Maintain for 6 years but Not Submit

  • Wage documents in regards to the reduction calculations. 
  • Wage information on any employee earning more than pro-rata $100,000 in one pay period in 2019. 
  • All employees’ job offers, refusals, firing for cause, voluntary resignations and requests for reduction in hours. 
  • All applicable documents establishing PPPFA exemptions including but not limited to the applicable regulations. 
  • All documents relevant to the application of a reduction exemption safe harbors. 
  • Loan application and supporting application documents. 
  • Documents that support the “necessity” of the loan request certification and support compliance with PPP loan regulations including but not limited to using the funds for the authorized purposes. 
  • Documents that support the forgiveness application.