Is my loan automatically forgiven?

No, you must apply for forgiveness. You must spend the money within the required timeframe on eligible items in order for it to be forgiven. You must then work with your Lender to make a formal application to the Small Business Administration.

I want to achieve 100% forgiveness. What should I do?

  • Keep or increase your FTEs,

  • Maintain salaries or hourly rates of employees,

  • Spend the loan on what it is supposed to be spent on, including at least 60% for payroll,

  • Keep good records of how you've spent the funds of the loan, and

  • Apply for forgiveness through your lender.

How is the potential forgivable amount of the PPP loan calculated?

The sum of the allowable payroll and nonpayroll expenses during the covered (or alternative covered) period. This amount is then reduced by any workforce and wage reduction penalties. The amount remaining after any reduction penalties is the forgivable amount (up to the amount of the loan and provided that payroll costs equal at least 60% of the total.)

If I don't get full forgiveness, what happens?

Your loan will begin amortizing at 1% over a two year period. You can petition your lender to extend the amortization period to 5 years instead.

If I don't get full forgiveness, do I have to keep the loan?

You can prepay the loan at any time without penalty.

What if we don't spend all the money in the forgiveness time frame?

You may return funds that have not been spent. Anything that is not forgiven continues as a loan to be spent on allowable uses at 1% interest.

So if you follow the rules, pay the staff their same wages, use 60% or more for payroll, retain all employees or replace those who left or attempted to in good faith, documented all attempts at rehire and attempts to hire but have not spent all the money in 8 weeks, does that amount need to be paid back?

Please refer to the FTE reduction exceptions to understand whether you qualify for those. If you don't, then yes, if you have not spent all of the funds at the end of the 8 week period, anything unspent must be paid back. Please note also that there is a new option to use 24 weeks as your covered period and you have until December 31st to recover your FTE. After December 31, any unspent funds must be returned. The unforgiven portion that you spent on eligible costs would be repaid at 1% interest beginning on the earlier of (a) the date on which the Lender receives a determination from SBA on the Borrower's application for loan forgiveness, or (b) 10 months after expiration of the covered period, which ends 8 or 24 weeks after the date on which the Original Note was executed, as elected by the Borrower.

Will the measuring stick for the payroll portion of loan forgiveness be based on head count/number of employees, total amount spent on payroll compared to average payroll amount/ payroll report dollar amounts, or FTE/ hours of payroll?

The forgiveness formula will be based on BOTH FTEs/hours of payroll AND total amount spent on payroll, as well as employee compensation levels. The total amount spend on the compensation portion of payroll costs requires an FTE analysis based on details of the compensation and average FTE per individual based on a 40-hour work week (see PPP Schedule A Worksheet (page 9) of the Loan Forgiveness application) add link . Reductions in loan forgiveness are based on aggregate salary/hour wage reductions compiled per employee. If you do not spend 60% of your PPP loan on payroll, your maximum forgivable amount will be adjusted down to whatever percentage of the 60% goal you have met. So if you have a $100k loan and you have only met half of the 60% goal (you spent 37.5% of your loan on payroll) your maximum forgivable amount would be half of your loan, or $50k. At the same time, if you reduce your FTEs relative to your pre-COVID levels, your maximum forgivable amount would be reduced proportionally. So if you have a $100k loan but you reduced your FTEs by 50% your maximum forgivable amount would become $50k. Note, however, that a number of "safe-harbors" apply to the FTE reduction requirement. If you have laid off employees and offer them their position back and they decline, you will not be penalized. Likewise, if you have to fire an employee for cause, or in an employee voluntarily resigns or requests a reduction in hours you will not be penalized. For more detailed information on the forgiveness calculation, see the most recent forms and guidelines posted by the SBA at:

According to Section (H) (iii) of the PPP promissory note, we have agreed to "restore not less that 90% of its workforce that existed on February 1, 2020 and restore all compensation and benefits to the Borrower's employees no later than 3 months after the termination date of the public health emergency declared by the Secretary of HHS." Is the February 1st headcount the official date to use to determine the 90%? Regardless of which date or method of calculation is used is 90% the official % to reach for full forgiveness?

Our promissory note was drafted prior to the guidance issued by SBA about loan forgiveness, and we will be issuing an amendment to address the new requirement soon. The FTE requirement is that borrowers retain all of their staff (100%) and not reduce salaries by more than 25%. There are exceptions and safe harbors, which are described in other FAQs.

Regardless of which date or method of calculation is used is 90% the official % to reach for full forgiveness?

To achieve 100% forgiveness, you need to ultimately restore 100% of your pre-COVID FTEs by December 31st or qualify under one of the Safe Harbor provisions of the program.