PPP Loan Forgiveness


Information for Borrowers

Paycheck Protection Program (PPP)

The Paycheck Protection Program ("PPP") authorizes up to $349 billion in forgivable loans to small businesses to pay their employees during the COVID-19 crisis. All loan terms will be the same for everyone.

Paycheck Protection Program (PPP)

The Paycheck Protection Program ("PPP") authorizes up to $349 billion in forgivable loans to small businesses to pay their employees during the COVID-19 crisis. All loan terms will be the same for everyone.


You should use the proceeds from these loans on your:

  • Payroll costs, including benefits;
  • Interest on mortgage obligations, incurred before February 15, 2020;
  • Rent, under lease agreements in force before February 15, 2020; and
  • Utilities, for which service began before February 15, 2020.

Payroll costs include:

  • Employee benefits including costs for vacation, parental, family, medical, or sick leave; allowance for separation or dismissal; payments required for the provisions of group health care benefits including insurance premiums; and payment of any retirement benefit;
  • State and local taxes assessed on compensation; and
  • For a sole proprietor or independent contractor: wages, commissions, income, or net earnings from self-employment, capped at $100,000 on an annualized basis for each employee.
  • The loan proceeds are used to cover payroll costs, and most mortgage interest, rent, and utility costs over the 8-week period after the loan is made; and
  • Employee and compensation levels are maintained.
  • Loan payments will be deferred for 6 months.

You will owe money when your loan is due if you use the loan amount for anything other than payroll costs, mortgage interest, rent, and utilities payments over the 8 weeks after getting the loan. It is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs.

You will also owe money if you do not maintain your staff and payroll:

  • Number of Staff: Your loan forgiveness will be reduced if you decrease your full-time employee headcount.
  • Level of Payroll: Your loan forgiveness will also be reduced if you decrease salaries and wages by more than 25% for any employee that made less than $100,000 annualized in 2019.
  • Re-Hiring: You have until June 30, 2020 to restore your full-time employment and salary levels for any changes made between February 15, 2020 and April 26, 2020.

Thorough recordkeeping is extremely important for getting your loan forgiven. When you receive your PPP loan, it is imperative to keep detailed records over the eight-week period. Please note that you will be required to certify your expenses. Here are some tips to help with the detailed recordkeeping:

  • Keep the PPP loan funds in a separate bank account.
  • Only debit out of your PPP loan proceeds account for qualified eligible expenses.
  • Keep an itemized list of all expenses debited from the PPP loan proceeds account, including all accompanying documentation.
  • All qualified expenses should be paid directly out of the PPP loan proceeds account.
  • Be sure to balance your itemized list of expenses against the PPP loan proceeds account.
  • Your lender will likely require all documentation in digital format, so take the time to scan any paper documents. Keep backups of your digital records.
  • You will be requested to certify all expense information pertaining to the loan forgiveness.

These are the required documents you will need to collect to provide with your PPP forgiveness application. Your lender may have additional requirements.

  • Documents verifying the number of full-time equivalent employees on payroll and their pay rates, for the periods used to verify you met the staffing and pay requirements:
    • Payroll reports from your payroll provider
    • Payroll tax filings (Form 941)
    • Income, payroll, and unemployment insurance filings from your state
    • Documents verifying any retirement and health insurance contributions
  • Documents verifying your eligible expenses (paid invoices, proof of payment, i.e., cancelled checks, payment receipts, account statements):
    • Interest payments
    • Rent
    • Utility payments, rent, and utility payments (canceled checks, payment receipts, account statements)

You are entitled to use the PPP loan to replace lost compensation due to the impacts of COVID-19. However, you are not entitled to use the full amount to replace pay. Eight weeks’ worth of your 2019 net profit will be eligible for forgiveness. Your net profit that was reported on your Form 1040 Schedule C is multiplied by 8/52.

If you have mortgage interest, rent, or utilities expenses, you must have claimed or be entitled to claim a deduction for those expenses on your 2019 Form 1040 Schedule C in order to claim them for forgiveness.

Sole proprietors can have eight weeks of the loan forgiven as a replacement for lost profit. But you will need to provide documentation for the remaining two weeks’ worth of cash flow, proving you spent it on mortgage interest, rent, lease, and utility payments.

You can submit a request to the lender that is servicing the loan. The request will include documents that verify the number of full-time equivalent employees and pay rates, as well as the payments on eligible mortgage, lease, and utility obligations. You must certify that the documents are true and that you used the forgiveness amount to keep employees and make eligible mortgage interest, rent, and utility payments. The lender must make a decision on the forgiveness within 60 days.



  1. You must maintain the number of full-time equivalent employees on your payroll. Here is the calculation you can use to determine if you have met this requirement:

First, determine the average number of full-time equivalent employees you had for:

  • The 8-week period following your initial loan disbursement, (A)
  • February 15, 2019 to June 30, 2019, (B1)
  • and January 1, 2020 to February 29, 2020. (B2)
  • Take Aand divide that by B1.
  • Do the same with B2.
  • Take the largest number you obtain.
  • If you’re a seasonal employer, you must divide by B1.
  • If you get a number equal to or larger than 1, you successfully maintained your headcount and meet this requirement.
  • If you get a number smaller than 1, you did not maintain your headcount and your forgivable expenses will be reduced proportionately.
  1. You must maintain at least 75% of total salary.
  • This requirement will be individually assessed for every employee that did not receive more than $100,000 in annualized pay in 2019.
  • If the employee’s pay over the 8 weeks is less than 75% of the pay they received during the most recent quarter in which they were employed, the eligible amount for forgiveness will be reduced by the difference between their current pay and 75% of the original pay.
  1. Rehiring Grace Period
  • You can rehire any staff that were laid off or put on furlough and reinstate any pay that was decreased by more than 25% to meet the requirements for forgiveness. You have until June 30th to do so. You will need proof of payment, so make sure they are paid before June 30th.

1.00% fixed rate.

All payments are deferred for 6 months; however, interest will continue to accrue over this period.

In 2 years.

Yes. There are no prepayment penalties or fees.

Schedule A Consultation

Hamic Previte & Sturwold, P.A., is here to help you design a solution to identify, track, and calculate your eligible expenses and documentation. Just contact us today at 863-682-5151!

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