Understanding PPP Loan Forgiveness

Presented by: Erica Horn, Associate Director of Tax Services and John Wurtenberger, Director of Assurance Services of Dean Dorton


Date: April 29, 2020


It’s difficult to keep businesses afloat in this pandemic with the ever-changing customer culture and habits. Many small businesses need the financial boost to ensure that their businesses thrive and keep their employees compensated. The PPP (Paycheck Protection Program) under the CARES Act aids small businesses in a way that their loans are forgiven if the proceeds of the loan are used to maintain their payrolls and other specific expenses. 


Erica and John explained further how you can maximize your forgiveness. Some key points mentioned were as follows: 


  • Spend on forgivable uses within the covered period
  • Spend at least 75% on payroll costs
  • Maintain base levels of average full-time equivalents and salary/wage during the covered period
  • On or before June 30,2020. Business owners should restore reductions in FTEs and/or employee salaries/wages made between February 15, 2020 and April 26, 2020. 
  • Retain documentation, average FTEs, and salary/wages

Forgivable causes and what you can do about them are also discussed in length. Included in your forgivable causes are payroll costs for employees. John mentioned that employees here don’t include those who are not working full-time or those that receive government assistance. Interests on secured debt, covered rent, and covered utilities are included in forgivable causes. As a business owner, it’s critical to ensure that loans are spent within the covered period and that all the expenses are documented properly. 


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