4 Things to Know about SBA’s Sample Application for PPP Loan Forgiveness

On Friday, May 15, the SBA came out with guidelines and a sample application for loan forgiveness in the Paycheck Protection Program (PPP). Here are 4 things you need to know now about PPP loan forgiveness and the SBA’s sample application and related worksheets:

Payroll Period Flexibility

The SBA has offered some flexibility regarding payroll during the eight-week (56-day) loan spending period.

  • You now have a choice to calculate payroll costs using an eight-week period starting the day your loan was funded or using an “alternative payroll covered period” that aligns with your regular payroll cycle. If, for example, you pay employees bi-weekly, you can start your “alternative payroll covered period” on the first day of your business’s first pay cycle following disbursement of your loan – making it easier for you to calculate your total payroll costs in the loan forgiveness application.

Expenses Paid & Incurred

Costs eligible for inclusion in your forgiveness application include expenses paid and expenses incurred.

  • Payroll costs incurred but not paid during the last pay period of the covered period or the alternative payroll covered period are eligible for forgiveness if paid on or before the next regular payroll date.
  • Eligible nonpayroll cost must be paid during the covered period or incurred during the covered period and paid on or before the next regular billing date, even if the billing date is after the covered period.

Expenses Paid & Incurred

Costs eligible for inclusion in your forgiveness application include expenses paid and expenses incurred.

  • Payroll costs incurred but not paid during the last pay period of the covered period or the alternative payroll covered period are eligible for forgiveness if paid on or before the next regular payroll date.
  • Eligible nonpayroll cost must be paid during the covered period or incurred during the covered period and paid on or before the next regular billing date, even if the billing date is after the covered period.

Restoring FTE levels by June 30

The SBA now allows you to qualify for a safe harbor exemption from loan forgiveness reduction if you restore FTE by June 30. Specifically, this safe harbor applies if the following two conditions are met:

  • You reduced your business’ FTE employee levels in the period beginning February 15, 2020, and ending April 26, 2020; and
  • You then restored FTE employee levels by not later than June 30, 2020 to the FTE employee levels in the pay period that included February 15, 2020.

Keep in mind, these are just a few of the things small businesses may want to consider, but these are by no means all the steps you may need to take to qualify for PPP loan forgiveness. Finally, as a PPP lender, Bank of the West can’t offer an opinion on whether the loan of any particular borrower qualifies for forgiveness.


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