The Payroll Blog

News, tips, and advice for small business owners

Paycheck Protection Program Loan Forgiveness: What You Should Know

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Karen Stoychoff

In this episode of SurePayroll’s Mainstreet Minute, Holly Wade, Executive Director of the National Federation of Independent Business, discusses the PPP loan forgiveness program. Listen to the Back of the Napkin episode featuring this Mainstreet Minute segment.


Small business owners would like to put a lot of things from 2020 behind them. One item on the list is getting their Paycheck Protection Program (PPP) loan forgiven. Most small business owners who received a PPP loan in 2020 have already filed for loan forgiveness, but for those who received a second PPP in 2021, some are still using their PPP funds on payroll and other eligible expenses.

“If you are still using your PPP loan proceeds or waiting to apply for forgiveness, remember that borrowers have 10 months from the last day of their covered period to apply for loan forgiveness,” said Holly Wade, Executive Director of the National Federation of Independent Business. “After the 10-month grace period, monthly loan payments begin.”

To qualify for full loan forgiveness, at least 60% of the funds need to be spent on payroll, leaving up to 40% of the PPP loan funds available to pay for eligible non-payroll business expenses such as mortgage interest, rent or lease payments and utility bills. More information on the expanded list of eligible non-payroll expenses can be found at the Small Business Administration’s website.

“The 60/40 rule on payroll and non-payroll expenses is particularly helpful if you also qualify for the Employee Retention Tax Credit,” said Wade.

Small employers can now take advantage of both programs, but not on the same wages. If you think you are eligible for both programs, talk to an accountant or CPA about how best to allocate your PPP funds for forgiveness so you can take full advantage of the Employee Retention Tax Credit.

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