As the Paycheck Protection Program (PPP) enters the second round of funding, loan recipients should be considering a thoughtful approach to pursuing loan forgiveness. Although the loan forgiveness parameters are still being clarified, the key elements for forgiveness are discussed below.

  • Have a plan for spending during the 8 week period. You will need to document spending during the 8 week period that begins upon receipt of the funds to support your upcoming forgiveness application.
  • Amount that can be forgiven. At the end of the 8 week period, you will need to apply for loan forgiveness through your SBA lender, including documentation to support the expenditures for which PPP funding was used.
  • Qualifying for forgiveness. In order to qualify, you shall spend 75% of the loan proceeds for payroll. This includes salary (capped at $100,000 per employee annualized), as well as employer paid health and retirement plan benefits. It cannot include payments to independent contractors.
  • Unforgiven portion. The unforgiven portion of a PPP loan can be repaid at anytime without prepayment penalty; loan terms being 2 years at 1%.

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