The Math on PPP Loan Forgiveness: Part 2

IMPORTANT: The information in the pdf below has not been updated with the most recent rules and guidelines. Please visit and watch our PPP loan forgiveness webinar which includes all the most recent information to assist with maximizing your PPP loan forgiveness.

The application for PPP Loan forgiveness has now been released and the calculation is complicated, but provides a few opportunities for borrowing business owners. These opportunities include an alternative eight week covered period, possible flexibility on the ‘incurred and paid’ rules, an expanded definition of non-payroll costs that includes rent and interest on personal property obligations and loans, exceptions for FTE reductions, and no cliff if 75% of the loan is not used on payroll costs as previously expected. The application also includes some new rules on owner compensation that limits increased owner compensation during the covered period.

The challenge of the application is in the formula and time periods used when calculating forgiveness. Ultimately, the final forgiveness amount will be the lesser of (a) the PPP loan, (b) eligible payroll costs divided by 75%, or (c) total eligible payroll and non-payroll costs reduced by salary/FTE reductions. Though more guidance is needed and expected, the following slides provide some explanations of the application process, eligible costs, and the math on forgiveness reductions.

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