Paycheck Protection Program – Loan Forgiveness Summary

Clients are beginning to receive funding from their Paycheck Protection Program loans and there are things you need to know to ensure forgiveness of these loans. Once the Paycheck Protection Program proceeds are received, the eight week period begins and a business must document how the proceeds were used and provide a computation of the number of equivalent full time employees (FTE’s) to determine the amount of loan forgiveness. 

Step 1 – Document Costs Incurred

During 8 week period:

Cost 1:

  • Document payroll/wage costs incurred- (Source documents such as payroll journals or payroll company summaries will be useful).
  • Document health insurance employer provided costs- During this time period, if health insurance invoices are paid, copy any source documents to substantiate the costs incurred.
  • Document any Company paid profit sharing payments that have been made during this time period. Please note this is only employer paid contributions, so employee 401K contributions are not eligible.
  • Employer paid state taxes. Document any state unemployment payments the Company incurs during this time period.
  • Please note that compensation on an annual basis per employee cannot exceed $100,000 ($8333.33 per month)

Additionally, in determining the eight week period costs incurred, up to 25% of the following costs can be included:

Cost 2:

Rent obligations – This is the lease of real property such as office space. As these obligations are paid during the eight week period, copy any supporting documentation to substantiate the cost incurred.

Cost 3:

Utilities – This includes:

  1. Electricity,
  2. Gas,
  3. Water,
  4. Telephone,
  5. Internet
  6. Transportation

As the above costs are incurred, please copy any supporting documentation to substantiate the costs incurred.

Cost 4:

Interest – This includes mortgage obligations that are secured by a mortgage on real or personal property. This would include debt on real property that is secured by a traditional mortgage lien, or other business indebtedness where a UCC-1 is filed.


  1. Only on debt incurred before 2/20/2020,
  2. Key item- has to be secured debt as illustrated above with the normal real estate mortgage lien or a UCC-1 filing.

Step 2 – Compare above costs computed during 8 week period with 75% of prior complete quarter:

There will be further clarification coming shortly. 

Step 3 – Computation of Full Time Equivalents:

The following full time equivalent computation periods will be required.  Please note the current guidance suggests that one FTE is an employee that works 30 hours a week. 

1. 8 Week covered period beginning with receipt of loan proceeds

2. 2/15-6/30/2019 or 1/1-2/29/2020

Choose lower of above two dates, and

3. 2/15-4/27/2020 and

4. 2/15/2020 and

5. Presumably from now until 6/30/2020

If your FTE’s in period 1 are less than period 2, you will have a reduction in forgiveness unless in period 5 you restore any reduction in employees that occurred during period 3 relative to date 4.

There will be further clarification coming shortly.

Overall, it is important to accumulate the four allowable costs during the 8 week period from the date the loan is received and have sufficient back up to support the accumulated costs.