Paycheck Protection Program Loan Forgiveness Eligibility
Whether you have recently received much-needed funds through the Paycheck Protection Program (PPP), or are hoping to apply in the future as additional funds become available, a key benefit of the loans under the program is the potential opportunity for forgiveness of the loan, in whole or in part. The amount of the PPP loan eligible for forgiveness under the Coronavirus Aid, Relief, and Economic Security (CARES) Act is based on many factors.
We’ve developed a PPP Loan Forgiveness Estimator to assist you in understanding what part of your loan may be eligible for forgiveness.
We expect the Small Business Administration and Treasury will issue further guidance on PPP loan forgiveness but here’s what we know today.
PPP Loan Forgiveness:
- Your loan can be forgiven up to the full principal amount of the loan and any accrued interest, but many factors may limit the amount eligible for loan forgiveness.
- Initially, the amount of your loan can only be forgiven up to the sum of the acceptable expenses (listed below) incurred and payments made, during an 8-week period beginning on the date of receipt of the loan from the lender (the “covered period”).
- If you are looking to maximize your loan forgiveness potential, you must use at least 75% of the loan amount for payroll costs and not more than 25% of the loan forgiveness amount may be non-payroll costs.
- Loan forgiveness potential will be further reduced if you (1) do not maintain the same number of full-time equivalents (FTEs) during the covered period as compared to a defined lookback period and/or (2) decrease wages paid for employees making less than $100,000 per year by more than 25%.
- Your loan will accrue interest of 1% but payments may be deferred for up to six months.
Acceptable Expenses:
- Payroll costs (including employee benefits)
- Interest payments on any covered mortgage obligation incurred before Feb. 15, 2020
- Payment of rent under a lease in force prior to Feb. 15, 2020
- Utility payments for which service began before Feb. 15, 2020
To estimate how much of your PPP loan may qualify for forgiveness, use our Paycheck Protection Program Loan Forgiveness Estimator.
