The Small Business Administration (SBA), in consultation with the Department of the Treasury (Treasury), recently released guidance with regard to the forgiveness of Paycheck Protection Program (PPP) loans in the form of frequently asked questions (the Forgiveness FAQs). The Forgiveness FAQs are divided into five sections, each of which are briefly outlined below. Although many of the questions addressed in the Forgiveness FAQs were touched upon, or addressed in their entirety, in previously released guidance, there are some new clarifications and helpful examples for how borrowers should calculate their PPP loan forgiveness amount. A copy of the Forgiveness FAQs can be found here.  

• General Loan Forgiveness: The first section of the Forgiveness FAQs contains three general questions regarding the forgiveness application process. The response to the first question clarifies which application form should be used by sole proprietors, independent contractors and certain self-employed individuals. The second response provides that PPP lenders can accept electronic signatures and scanned copies of loan forgiveness applications and documents. The third clarifies whether payments must be made prior to the SBA remitting the forgiveness amount, if any.

• Payroll Costs: The second section of the Forgiveness FAQs contains eight questions regarding payroll costs that are eligible for forgiveness and how to calculate certain eligible payroll costs. The questions cover topics such as forgiveness eligibility depending on when payroll costs were incurred or paid, how to calculate payroll costs for partial pay periods, how to calculate cash compensation, group health care benefits and retirement benefits that are eligible for forgiveness, and how to determine how much owner compensation is eligible for forgiveness. 

• Non-payroll Costs: The third section of the Forgiveness FAQs contains seven questions focused on non-payroll costs that are eligible for forgiveness. The questions address, among other things, when non-payroll costs are incurred or paid, if the Alternative Payroll Covered Period applies only to payroll costs, and whether certain specific non-payroll costs are forgiveness eligible, such as certain types of interest and utility payments.

• Forgiveness Reductions: The fourth section of the Forgiveness FAQs contains five questions addressing circumstances that will (or will not) reduce a PPP borrower’s loan forgiveness amount. This section also addresses how borrowers should calculate the reduction in their loan forgiveness amount arising from a reduction in full-time employees during the Covered Period and reductions in employee salaries and/or hourly wages. 

• Economic Injury Disaster Loans: The fifth section of the Forgiveness FAQs contains three questions regarding how Economic Injury Disaster Loans should affect PPP loan forgiveness.