PPP Loan Forgiveness Forms and FAQ

SBA - U.S. Small Business Administration

The SBA recently released its PPP Loan Forgiveness Application form. We are providing highlights and examples from the form below to help guide you through the process. If you have specific questions not covered here, please ask on our Community page where you can engage with business experts and other small business owners. 


The loan forgiveness application form is available here. The SBA posted its interim final rule for loan forgiveness on May 22. It is available here.

  • You will submit this form to your PPP lender. Your lender may establish an online form for submitting this information. 
  • Additional documents you’ll need to submit: 
    • Payroll records
    • Receipts and agreements for approved nonpayroll costs (mortgage interest, rent, utilities)
    • Other documents deemed necessary by the SBA

Covered Period and Alternative Payroll Covered Period

The Covered Period for your loan begins the day your loan was originated and lasts for 8 weeks. 

If you pay biweekly or more frequently, you can use the Alternative Payroll Covered Period in your payroll costs forgiveness calculations, with a start date of when your standard payroll period begins immediately after you originate the loan. The goal is to make payroll calculations easier. Some places on the application may ask for just the Covered Period, in which you cannot use the Alternative. 

If you pay less frequently than biweekly, you cannot use the Alternative Payroll Covered Period method. 

Payroll costs

Payroll costs are considered paid on the day that paychecks are distributed or you originate an ACH credit transaction. Payroll costs are considered incurred on the day that the employee’s pay is earned. 

Some payroll costs incurred before the start of the covered period can be forgiven if they were paid after the covered period begins. Likewise, payroll costs paid after the end of the covered period can be forgiven if they were incurred before the end of the covered period. 

Non-payroll costs

Non-payroll costs eligible for forgiveness are as follows, along with documentation needed to verify the expense: 

  • Mortgage interest
    • Lender amortization schedule and receipts/checks; or 
    • Account statements from your lender from February 2020 and the months of the Covered Period through one month after the end of the Covered Period
  • Rent
    • Copy of your lease agreement, as well as receipts/cancelled checks; or
    • Account statements from the lessor showing payments from February 2020 and for one month after the end of the Covered Period
  • Utilities
    • Copy of invoices from February 2020 and those paid during the Covered Period, as well as receipts, cancelled checks, or account statements of those payments.

These costs can only be forgiven if they were paid during the covered period, or on the first due date after the covered period ends. 

Owner-employees/general partners/self-employed compensation

This amount is capped at $15,384 or 8 weeks worth of your applicable compensation from 2019, whichever is lower. For self-employed individuals, this is your net profit from your 2019 Schedule C, divided by 52, multiplied by 8. 

Payroll forgiveness reduction calculations and examples 

Payroll reduction

Here is an example for how forgiveness would be reduced if an employee’s wages fall below the 75% threshold. 

  • Employee’s salary was average annual salary was $60,000 between Jan 1., 2020 and March 31, 2020. The employee’s average annual salary for the 8-week covered period was $42,000. 
  • $42,000/$60,000 = 70%
  • If safe harbor (see below) doesn’t apply, forgiveness attributed to this employee would be reduced by $462.
    • 60,000 * .75 = 45,000
    • 45,000 - 42,000 = 3,000
    • 3,000 / 52 * 8 = 462 

FTE reduction

Your forgiveness could be reduced if your average FTE count during the covered period is less than the average FTE count during any of the following periods (you choose the period): 

  • The period beginning on February 15, 2019 and ending on June 30, 2019; or
  • The period beginning on January 1, 2020 and ending on February 29, 2020, or
  • For a seasonal employer, as determined by the SBA, either of the two previous periods or any 12-week period between May 1, 2019 and September 15, 2019.

For example, using a $100,000 PPP loan: if you have 6.5 FTE from Jan 1.-Feb. 29, 2020, and 5.5 FTE during the covered period, your forgiveness would be reduced to roughly $84,615 (100,000 * 5.5 \ 6.5). 

Note: This FTE reduction would not apply if you meet safe harbor and exclusion requirements noted below.  

Total reduction

Here is an example of your expected forgiveness amount if your payroll costs are not 75% of the total loan size. 

  • PPP loan size: $100,000
  • Eligible payroll costs: $50,000
  • Eligible nonpayroll costs: $25,000
  • Total forgivable amount: $66,667 - $50,000 for payroll and $16,667 for nonpayroll (25% of total forgivable amount)

FTE reduction exemptions and safe harbor

The following reductions do not affect forgiveness if:

  • You made a good-faith, written offer to rehire an employee and they refused; or 
  • You fired an employee for cause; an employee voluntarily resigned; or an employee voluntarily requested a reduction in hours 

Additionally, if you reduced hours and/or headcount between February 15 and April 26, 2020, and restored your FTE employee count to your February 15 levels by June 30, 2020, then you are exempt from the FTE forgiveness reduction.