PPP Loan Forgiveness: How to Get Your PPP Loan Forgiven

On August 10, the SBA opened its PPP forgiveness portal to lenders. However, many lenders are waiting to send applications to the SBA due to ongoing legislation talks in Congress. Consult your lender for more information.

With loan forgiveness on the line, you probably didn’t apply for a Paycheck Protection Program (PPP) loan for the low-interest rate of 1%. So, you got the loan. Now, you want to know how to get your PPP loan forgiveness.

If you can get your PPP loan fully forgiven, you will have essentially received free money to help your business navigate through the era of COVID-19. And who doesn’t want that?  

But as the SBA continues to release new details on how to get your PPP loan forgiven, you may have some questions (and frustrations) about the process. 

How to get your PPP loan forgiveness

Depending on what you do with your PPP loan during the eight (if applicable) or 24 weeks after receiving it, you may qualify for partial or full forgiveness. 

We know you really want to know how to get it fully forgiven. Use the following tips on how to make sure your PPP loan is forgiven to get started:

Use it for eligible expenses Keep your employee headcount up Don’t reduce an employee’s wages by more than 25% Document everything  Talk with your lender Apply for loan forgiveness

In short, the PPP forgiveness calculation factors in 1) what you spent your PPP loan on, 2) your employee headcount, and 3) whether you reduced an employee’s wages by more than 25%. 

1. Use it for eligible expenses 

For PPP loan forgiveness, you must use 100% of the loan for eligible expenses. Eligible expenses include payroll costs, interest on mortgages, rent, and utilities. And, the SBA requires you to use the majority of your loan for payroll expenses. 

Use at least 60% for payroll costs and 40% for the qualifying non-payroll costs.* Here’s the breakdown:

60%: Payroll costs Salaries, wages, commissions, tips, bonuses, or hazard pay ($100,000 gross earnings max per employee)** Employee benefits (vacation, parental, family, medical, or sick leave***; separation pay; group health care coverage; and retirement benefits) State and local taxes assessed on compensation 40%: Non-payroll costs  Interest on mortgages (mortgages incurred before February 15, 2020) Rent (leases dated before February 15, 2020) Utilities (service agreements dated before February 15, 2020

*If you’ve been following the PPP closely, you know that the expense breakdown was originally 75% payroll and 25% non-payroll. But on June 5, the Paycheck Protection Program Flexibility Act was signed into law. This changed the 75/25 rule to 60/40. 

**Keep in mind that your employer share of payroll tax does not count toward payroll costs. Federal taxes you withhold from employee wages (FICA tax and federal income tax) also do not count as eligible payroll costs

***You can use your PPP loan to cover paid sick leave, but you cannot use it to cover paid sick and family leave wages under the Families First Coronavirus Response Act

If you are a self-employed individual who received a PPP loan, you must use 60% of the loan on wages, commissions, income, or net earnings from self-employment. There’s also a cap on the amount of loan forgiveness you can request if you’re self-employed, according to

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