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Paycheck Protection Program (PPP) Forgiveness Cheat Sheet

Coronavirus (COVID-19) - Paycheck Protection Program (PPP) Forgiveness for Small Businesses


As you know, things are constantly changing with the Paycheck Protection Program. Our goal is to create an outline here of the things you need to know about when it comes to forgiveness.

Bookkeeping is the back bone to every business. With that being said, bookkeeping can quickly become an incredibly hard task unless you follow these four simple rules.


  • Time to Use Funds: 24 Weeks or December 31st (Whichever comes first) — You have an option to use 8 weeks if you received funding prior to June 5th
  • Required Amount Used on Payroll: 60%
  • Amount NOT Forgiven Loan Term: 5 Year Term at 1% (accruing immediately) with 6-month payment deferral from the date of loan disbursement

Costs Eligible for Forgiveness

  1. Payroll Costs (Must be at least 60%):  Paid or incurred during the covered period including: Salaries, wages,  employee health insurance contributions by employer, employee retirement plan contributions by employer, and state and local payroll taxes. NOTE: Capped at $100k Annualized per Employee and employer share of FICA is not included in the costs.
  2. Self Employed/Owner Payroll Max: $15,385 (8 Week Period) or $20,833 (24 Week Period) – They are also capped by the amount of their 2019 employee salary and retirement contributions. NOTE: Owner health insurance is no longer figured into the eligible costs for forgiveness. Non-owner health insurance still is.
  3. Max 40% of: Mortgage interest, Utilities, Rent

Employee Headcount or Pay Reduction

Your forgiveness amount may be reduced if:

  1. You reduce employee pay in excess of 25% (Salary or Hourly)
  2. You reduce employee headcount or Full-Time Equivalent (FTE). There are two methods to calculate FTE:
    • Long Method: Average hours each employee paid per week, divided by 40 and rounded to nearest 10th with a maximum of 1.
    • Simple Method: 40+ Hours = 1 FTE and <40 Hours = .5 FTE
    • Example 3 employees working 25, 35 and 42 hours per week. Using the long method your FTE would be 2.5 and using the simple method it would be 2.
  3. If you restore to original numbers by December 31st or end of the covered period (date you file your application) you are fine.
  4. Exceptions:
    • Inability to rehire individuals or similarily qualified individuals (or employee denies offer to come back at original level)
    • Able to document inability to return to the same level of business activity as business was operating at before 2/15 due to COVID restrictions.

Loan Forgiveness Process

  1. Complete and Submit Forgiveness Application to Bank (SBA Form 3508 or 3508EZ) within 10 months after the last day of the covered period. NOTE: A borrower may submit a loan forgiveness application before the end of the covered period if the borrower has used all of the loan proceeds for which they are requesting forgiveness.
  2. Lender has 60 days from receipt of application to issue a decision to SBA.
  3. SBA will deduct EIDL advance amounts from the forgiveness amount.

Check out our episode on the Small Business Tax Savings Podcast regarding this topic!

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