OUTDATED: Congress passed the Flexibility Act that changed many of the rules below. See this post.


On May 15, 2020, the SBA released the Paycheck Protection Program (PPP) loan forgiveness application form, available here. Borrowers should use this form upon completion of the eight-week period covered by the loan forgiveness.

Some previously open questions that were answered by the new form:

  • FTEs are based on 40 hours per week, rather than 30 hours per week, as originally predicted
    • To calculate FTEs, the employer must, for each employee, enter the average hours per week and divide by 40 and round to the nearest tenth and then add up all decimal amounts for all employees
    • Alternatively, employers can assign a value of 1 FTE to employees who work 40 or more hours and 0.5 FTE to employees who work less than 40 hours per week
  • Borrowers must check a box to indicate if the original loan was in excess of $2 million, triggering an audit of the need for the loan
  • Borrowers must certify, under penalty of civil and criminal fraud charges, that they used the funds for authorized purposes–even if the loan amount is less than $2 million
  • Borrowers may change the eight-week forgiveness period to match their payroll schedule–rather than using the exact date of the disbursement
    • The alternative eight-week period begins on the first day of the first pay period following the loan disbursement date
  • Payroll costs are “paid” for purposes of falling within the forgiveness period if paychecks are distributed to employees or direct deposited during the eight-week covered forgiveness period OR if they are incurred during the eight-week period and paid on the next payroll date (even if the next payroll date is outside the covered period)
  • Payroll costs are limited to $15,385 for any one employee during the eight-week period (the equivalent of an annual salary of $100,000)
  • Forgiveness will not be reduced by any of the following:
    • An FTE lost where the employer made a good faith offer of rehire, and the employee rejected
    • An FTE fired for cause
    • An FTE who voluntarily requested and received a reduction in hours
    • If average FTEs were reduced but the following are met:
      • The employer reduced FTEs from 2/15/20-4/6/20 due to the COVID-19 pandemic AND
      • The employer restored its FTEs before 6/30/20 to the level that existed in the pay period prior to 2/15/20
  • The 25% of funds used for other (non-payroll) covered costs must be paid during the eight-week period or incurred and paid before the next billing date (even if outside the eight-week covered period)
    • An alternative eight-week forgiveness period is not available for these costs