Paycheck Protection Program Forgiveness Guidelines

SBA Paycheck Protection Program (PPP)

Loan Forgiveness Update – 10/16/2020

Good news for PPP borrowers of $50,000 of less:  On October 9, the SBA announced a new simplified forgiveness application for PPP loans of $50,000 or less. The new application (Form 3508S) requires that borrowers certify that they used their PPP funds for eligible purposes, including at least 60% of their loan amount for payroll expenses, and that their forgiveness request does not include more than $20,833 of 2019 compensation for any owner-employee, general partner or self-employed individual. If a borrower qualifies, they may use the new simplified form and submit the supporting documents that are required with it.

As soon as this new application is available through our software vendor in early-mid November, we will email all of our PPP borrowers of $50,000 or less an online link to their forgiveness application. In the meantime, please do not submit your application manually because we cannot submit it to the SBA until their forgiveness portal is open to receive simplified applications. A copy of the new simplified application form is available for your review via the link below:

Click here to access the PPP forgiveness application for loan amounts less than $50,000.

Payment Deferral for all PPP Borrowers

FOR ALL OF OUR PPP BORROWERS:  After your loan was made, PPP rules were changed to delay the first payment until after the SBA acts on your forgiveness application, assuming you apply within 10 months. As a result, regardless of the date listed in your loan documents, your first loan payment will not be due until sometime next spring (2021) at the earliest. Please do not be concerned that you are going to be required to begin making payments in the next 30-60 days as you have been expecting.

Loan Forgiveness, Updated 10/02/2020

Below is important updated information on your PPP forgiveness application:

  • The SBA has announced that they will finally begin reviewing PPP forgiveness applications for approval and repayment during the week of October 5th. Accordingly, we encourage all of our borrowers with PPP loans greater than $50,000 to complete and submit their forgiveness application to the bank as soon as possible so we can review and submit them to the SBA shortly. See below for more details if you have not yet completed your forgiveness application.
  • Borrower with PPP loans ranging from $50,000-150,000 will receive an email from us on Monday, October 5th containing a unique link to your online forgiveness application tool. This online software will walk you through the application process, including a determination of which application form you qualify to use. The email will be sent from, so please check your spam filter if you do not see it in your inbox.
  • Borrowers with PPP loans greater than $150,000 previously received an email from us in July with a link to your online forgiveness application tool. If you have not yet completed your application, please do so as soon as you have spent all of your PPP funds so we can approve and submit your application to the SBA as soon as possible.
  • There continues to be much discussion in Washington D.C. about approving a one-page application to simply forgiveness for all PPP loans of $150,000 or less if the borrower certifies that they complied with PPP rules. This waiver would replace the current forgiveness applications for these borrowers, saving them the time and hassle of gathering supporting documents and completing and submitting either the 11-page or 3-page forgiveness application. Information on the bill that is awaiting action in Congress can be found here:
  • We encourage you to reach out to your congressman and senators to ask them to support this provision since it will save you time that can be spent focusing on your business instead of gathering documents and completing the PPP application. In the meantime, we are delaying work on forgiveness applications for loans of less than $50,000 as we monitor the progress of this simplification bill.



Loan Forgiveness Forms

The two application forms that are currently available from the SBA for PPP forgiveness are:

  • An 11-page application (Form 3508) that requires you to submit information to compare your employee headcount and compensation levels currently and prior to COVID-19, in addition to a summary of how you spent your PPP funds.
  • An abbreviated 3-page application (Form 3508-EZ) that requires you to summarize how you spent your PPP funds. Borrowers must meet one of the following criteria to be eligible to use this form:

☐ The Borrower is a self-employed individual, independent contractor, or sole proprietor who had no employees at the time of the PPP loan application and did not include any employee salaries in their borrower application,


☐ The Borrower did not reduce annual salary or hourly wages of any employee by more than 25 percent after their PPP loan was made compared to the period between 1/1/20 and 3/31/20 (other than employees who were paid during 2019 at an annualized rate of more than $100,000); AND

The Borrower did not reduce the number of employees or the average paid hours of employees between 1/1/20 and the end of their Covered (forgiveness) Period. (Ignore reductions that arose from an inability to rehire individuals who were employees on 2/15/20 if the Borrower was unable to hire similarly qualified employees for unfilled positions on or before 12/31/20. Also ignore reductions in an employee’s hours that the Borrower offered to restore and the employee refused.


☐ The Borrower did not reduce annual salary or hourly wages of any employee by more than 25 percent after their PPP loan was made compared to the period between 1/1/20 and 3/31/20 (other than employees who were paid during 2019 at an annualized rate of more than $100,000); AND

The Borrower was unable to operate during the Covered Period at the same level of business activity as before 2/15/20, due to compliance with requirements established or guidance issued by government agencies between 3/1/20 and 12/31/20 related to the maintenance of standards of sanitation, social distancing, or any other work or customer safety requirement related to COVID-19.

Loan Forgiveness Overview

Forgiveness is based on the employer using their PPP funds for payroll expenses, mortgage interest or rent, or utilities expenses during the first several weeks after the loan close and maintaining or quickly rehiring employees and maintaining salary levels near their prior levels. Forgiveness will be reduced if full-time headcount declines, or if salaries and wages for any specific employees decrease by more than 25%. The loan forgiveness applications and instructions released by the SBA recently include the following measures to reduce compliance burdens and simplify the process for borrowers: 

  • Options for borrowers to calculate payroll costs using an “alternative payroll covered period” that aligns with borrowers’ regular payroll cycles 
  • Flexibility to include eligible payroll and non-payroll expenses paid or incurred during the covered forgiveness period after receiving their PPP loan 
  • Borrower-friendly implementation of statutory exemptions from loan forgiveness reduction based on rehiring by December 31, 2020 
  • Addition of a new exemption from the loan forgiveness reduction for borrowers who have made a good-faith, written offer to rehire workers that was declined, or for borrowers who are unable to return to their prior levels of business activity between 3/1/20 – 12/31/20 due to compliance with requirements or guidance issued by certain federal government agencies for sanitation, social distancing, or employee/customer safety related to COVID-19. 

Click here to access the full version of the PPP Loan Forgiveness Application (Form 3508). 

Click here to access the new abbreviated PPP Loan Forgiveness Application (EZ Form 3508-EZ) 


6/5/20 Update 

The President signed a new law passed by Congress earlier this week (the PPP Flexibility Act) that makes several changes to the rules of the PPP program including the following: 

  • Extended the forgiveness period from 8 weeks to 24 weeks 
  • Lowered the minimum required payroll expenditure of PPP funds from 75% to 60%, which now allows up to 40% of PPP loan funds to be used for non-payroll expenses such as rent, mortgage interest, and utility payments. 
  • Flexibility to include eligible payroll or non-payroll expenses that were either “paid or incurred” during the forgiveness period, which can effectively extend the forgiveness period by a few days or couple of weeks depending on your payroll schedule. 
  • Extended the ability of business owners to receive full forgiveness as long as they rehire staff reductions by December 31, 2020 (rather than June 30 as previously set) 
  • Employers now have, in order to be eligible for full forgiveness, until December 31, 2020 to rehire employees or replace them with new employees to return to the number of full-time employees they had prior to February 15, 2020.  
  • In regard to full forgiveness, employers can avoid being penalized for not returning by December 31, 2020 to at least the number of full-time employees they had prior to February 15, 2020 if they document: (1) an inability to rehire individuals who were employees on 2/15/20, and (2) an inability to hire similarly qualified employees for unfilled positions on or before 12/31/20. Employers can also avoid penalty if they document an inability to return to the same level of business activity they were operating at before 2/15/20 due to compliance with requirements or guidance issued by HHS, the CDC or OSHA during the period from 3/1/20 – 12/31/20 regarding sanitation, social distancing or other worker/customer safety requirement related to COVID-19. 

You may hear that the law also extended the maturity date from two years to five years and the initial payment deferral from six months up to 12 months, but these provisions will not apply to existing PPP loans that have already closed and funded prior to today. 

Because we want to make the forgiveness process as easy for you as possible, we will be emailing you soon with a partially prefilled forgiveness application and worksheets with an online completion tool. This tool will provide helpful hints as you complete the application to guide you to the instructions and information you need. Unlike the application on the SBA or Treasury website, our application will also help you calculate totals on the application and automatically transfer worksheet totals to the forgiveness application, reducing the time required to complete it and the potential for errors along the way.  

Earlier Updates 

Below are select published comments and guidelines released by the SBA or Treasury Department regarding eligibility for forgiveness, which we are providing for informational purposes to help PPP borrowers make business decisions  


How much of my loan will be forgiven? 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 eight (now 24) weeks after getting the loan. No more than 40% 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 December 31, 2020 to restore your full-time employment and salary levels for any changes made between February 15, 2020 and April 26, 2020.  


Can my PPP loan be forgiven in whole or in part?  Yes. The amount of loan forgiveness can be up to the full principal amount of the loan and any accrued interest. That is, the borrower will not be responsible for any loan payment if the borrower uses all of the loan proceeds for forgivable purposes described below and employee and compensation levels are maintained. The actual amount of loan forgiveness will depend, in part, on the total amount of payroll costs, payments of interest on mortgage obligations incurred before February 15, 2020, rent payments on leases dated before February 15, 2020, and utility payments under service agreements dated before February 15, 2020, over the eight-week (now 24-week) period following the date of the loan 

However, not more than 25 (now 40) percent of the loan forgiveness amount may be attributable to nonpayroll costs. While the Act provides that borrowers are eligible for forgiveness in an amount equal to the sum of payroll costs and any payments of mortgage interest, rent, and utilities, the Administrator has determined that the non-payroll portion of the forgivable loan amount should be limited to effectuate the core purpose of the statute and ensure finite program resources are devoted primarily to payroll.  

Do independent contractors count as employees for purposes of PPP loan forgiveness?  No, independent contractors have the ability to apply for a PPP loan on their own, so they do not count for purposes of a borrower’s PPP loan forgiveness.