PPP Forgiveness FAQs (August 4, 2020)

On August 4, 2020, the SBA released a list of FAQs related to the PPP forgiveness process. Our team has read each of these updates, along with consultation with our independent governing body, and has summarized the key highlights below. There were other clarifying points that have not altered our previous positions and communications to you. The full list of SBA Forgiveness FAQs can be found at the following link:


General Loan Information

  1. Sole proprietors, independent contractors, and self-employed individuals who had no employees at the time their PPP loan application was filed AND did not include employee compensation (outside of themselves) as part of their PPP loan application, automatically qualify to use Forgiveness Application Form 3508EZ (or lender equivalent).

  2. Borrowers will not be obligated to make any required payments against their PPP loan until the SBA has remitted the forgiveness amount to the lender. If a loan is fully forgiven, the borrower is not responsible for any payments. If the PPP loan is partially forgiven, or the forgiveness application is denied, the borrower is responsible for making required payments against both the unforgiven loan principal and accrued interest on such principal from the date of loan origination.

Payroll Costs

  1. Borrowers whose payroll cycle pays twice a month or less frequent will need to calculate payroll costs for partial pay periods. Borrowers whose payroll cycle is bi-weekly or more frequent do not need to account for partial pay periods.

  2. Payroll costs include all forms of cash compensation paid to employees, including tips, commissions, bonuses, and hazard pay, whether earned or paid as a replacement for such compensation lost during the covered period.

  3. Forgiveness is not provided for group health care expense accelerated from periods outside the Covered Period or Alternative Payroll Covered Period.

  4. Forgiveness is not provided for employer contributions for retirement benefits accelerated from periods outside the Covered Period or Alternative Payroll Covered Period.

  5. An owner-employee is defined as someone who received cash compensation from a business where they also hold an ownership stake within the same business. Forgiveness of total payroll compensation, inclusive of both cash and non-cash compensation, paid to such individuals is capped at $15,385 (8-week period) or $20,833 (24-week period) in total across all business in which he or she has an ownership stake.