Can My PPP Loan Be Forgiven? Four Steps to Success

September 18, 2020 11:13 am Published by Mountain, Dearborn & Whiting LLP

If you received a Small Business Administration loan under the Payroll Protection Program to keep your staff employed during the Coronavirus pandemic, now is the time to be certain that you’ve fulfilled all requirements to have your loan forgiven.

The PPP stopped accepting new loan applications on August 8. If your loan—either for 8 weeks or 24 weeks—was issued prior to June 5, it will mature in two years. Loans issued after that date will mature in five years. If any part of the loan is not forgiven, then your loan payments will be deferred for six months. The interest rate on the loans is 1 percent.

Here are some tips to help you wade through all the requirements for loan forgiveness:

1. The most important criterion for loan forgiveness: use your funds appropriately. At least 60 percent of the loan must have been used to cover payroll costs for both the 8- and 24-week covered periods. Your eligibility for loan forgiveness depends on whether you maintained or rehired your employees, at their current salaries, soon after receiving your loan. If your full-time headcount declined, or if salaries or wages decreased, then the amount of your loan forgiveness will be reduced proportionately. You can find more details on the U.S. Small Business Administration’s website.

2. Consult an accountant to review what is needed for forgiveness. Applying for PPP loan forgiveness is a complex process, but you may not even need to go through it if the amount of your loan is below a threshold. Legislation is pending in Congress to simplify the process and automatically forgive loans under $150,000. With the breakdown in stimulus talks, however, it is not yet clear whether this provision will become law.

3. If you don’t have an accountant, you can still find some excellent YouTube tutorials to walk you through the process of PPP loan forgiveness. Look for instructions from a CFA or CPA.

4. Keep good records to document how your loan was used. As noted above, what percentage of your loan was used for payroll, and how your current payroll compares to your pre-pandemic payroll, will affect what portion of your loan is forgiven. When working with an accountant (or if you complete the forgiveness application on your own) you will need to provide the following documentation:

  • Payroll records during the period the loan was used;
  • A list of all employees pre-pandemic, including number of hours worked and their salary at that time;
  • A list of current employees, hours worked, and salary;
  • Copies of invoices of mortgage interest payments, business rent payments or lease costs, and utility payments made with PPP funds;
  • Bank statements regarding your PPP funds.


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