PPP Loan Forgiveness Guide

Our PPP Loan Forgiveness Guide is an easy to use resource to help you navigate the PPP loan forgiveness process and avoid (or mitigate) potential consequences of noncompliance. This Guide includes:

  • Detailed commentary on the Paycheck Protection Program
  • Clear instructions to help you complete the SBA loan forgiveness application
  • Guidance on how to calculate the amount of loans eligible for forgiveness
  • Ready-to-use checklists to support your documentation efforts
  • Additional resources and recommended practices
This Guide may be used as stand-alone reference as you prepare your application, or, you may wish to consult with an FTLF attorney to discuss the nuances of your specific circumstances through our PPP Loan Forgiveness Assistance Service.

The Coronavirus Aid, Relief, and Economic Security (“CARES”) Act established the Paycheck Protection Program (PPP), authorizing loans of up to $10 million for business and nonprofits with fewer than 500 employees. To cover losses caused by the COVID-19 pandemic, these loans were intended to be forgivable if a borrower retained workforce levels. 

In implementing the program, the Small Business Administration (SBA) issued an evolving set of rules that restricted the loan amounts eligible for forgiveness. For example, SBA guidance limited the extent to which payroll and nonpayroll costs are eligible for loan forgiveness. At the same time, the rules established exceptions and safe harbors for reductions to amounts eligible for forgiveness due to layoffs and salary cuts. 

Federal grantees that received PPP loans face additional legal complications. To avoid charging the same costs to both the PPP loan and other federal grant programs (i.e., so-called “double dipping”), federal grantees need to carefully consider which costs are charged to the PPP program and which are charged to other federal programs.

Borrowers that fail to comply with SBA guidance or lack proper documentation could face a variety of potential consequences, including:

  • Forgiveness for less than the full amount of the loan, up to repayment of the loan in full
  • Scrutiny by the Department of Justice, federal watchdog agencies, and whistleblowers
  • Cost disallowances from funding agencies
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I. A Short History of the PPP Loan Program

  • CARES Act Paycheck Protection Program
  • Paycheck Protection Program Flexibility Act of 2020
  • Frequently Asked Questions (FAQs) on loan forgiveness
  • SBA Interim Final Rule on loan forgiveness

II. Costs Eligible for Forgiveness

  • Definition of payroll costs
  • Definition of non-payroll costs
  • The 60% payroll costs requirement

III. Timing of Costs Eligible for Forgiveness: Loan Covered Periods

  • Importance of the loan “Covered Period”
  • Definition of loan “Covered Period,” including the 8-week and 24-week options
  • Definition of “Alternative Payroll Covered Period”
  • Options for selecting a loan covered period
  • Applying eligible costs to your Applicable Loan Covered Period

IV. FTE and Salary Reduction Limitations on Loan Forgiveness

  • Defining an FTE for loan forgiveness purposes
  • Calculating FTE reduction penalty
  • Calculating salary/wage reduction penalty
  • Safe harbors to forgiveness reduction penalties
  • Exceptions to forgiveness reduction penalties

V. Deconflicting Funding Streams for Federal Grantees

  • Maximizing loan forgiveness while avoiding “double dipping”
  • Tracking PPP and grant expenditures
  • Sample tracking spreadsheet

VI. Documents that Must be Submitted with your PPP Loan Forgiveness Application

  • Payroll documentation
  • FTE Employees documentation
  • Non-payroll documentation

VII. Documentation that Must be Maintained

  • PPP Loan Forgiveness Application
  • PPP Loan Forgiveness Application certifications
  • PPP Loan Forgiveness Application Worksheet Schedule A
  • Document retention period

VIII. Certain Tax Implications of PPP Loans

  • Federal income tax
  • State taxes
  • Federal tax credits for employee retention
  • Deferral of federal employment taxes

Checklists & Additional Resources

  • Required documentation
  • Documentation that must be maintained


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By purchasing this Guide, you acknowledge and agree to our Terms of Use and Privacy Policy. This Guide has been prepared by attorneys at Feldesman Tucker Leifer Fidell LLP (FTLF) and includes original materials developed by FTLF. This Guide is designed as a resource to assist your organization in navigating the loan forgiveness process of the Paycheck Protection Program (PPP). The materials are not intended to be adopted word for word; FTLF recommends that each organization tailor the materials to fit its specific legal, financial, administrative, and programmatic needs. Failing to modify the original materials to the specific needs of your program may have adverse consequences. 

By purchasing this Guide, you acknowledge and agree that the materials contained herein do not constitute legal advice and your purchase does not create an attorney-client relationship between you and FTLF, nor is it intended to do so. If legal advice or other expert assistance is required, your organization should enter into an engagement agreement with FTLF or seek the services of another competent professional. Each legal problem is different, and past performance does not guarantee future results.

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