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By now, you’ve likely heard about the Paycheck Protection Program (PPP), a loan that acts as emergency relief as well as an incentive for small businesses to keep their workers on the payroll in the midst of the COVID-19 pandemic. The U.S. Small Business Administration (SBA) will forgive a small business’s PPP loan if all of its employees are kept on the payroll for eight weeks and the loan money is used for business expenses including payroll, rent, mortgage interest, or utilities.

While the launch of this new program was good news for businesses around the country, questions keep coming up about using the funds, guaranteeing forgiveness, and more. The program only seems more confusing as the procedures evolve. So, we’ve collected what we know so far.

Planning for PPP loan forgiveness

On May 15, 2020, the SBA released the PPP Loan Forgiveness Application and Instructions for Borrowers. The document provides instructions for calculating loan forgiveness. It also answers questions such as:

What is the “Covered Period”?

The Covered Period is the eight-week period starting on the day the borrower receives the PPP loan funds. The SBA is allowing borrowers with a more frequent payroll schedule (such as biweekly) to elect to calculate eligible payroll costs using the eight-week period that begins on the first day of their first pay period following their PPP Loan Disbursement Date.

When are payroll costs considered paid?

Payroll costs are considered paid on the day that paychecks are distributed or the borrower originates an ACH credit transaction. Payroll costs are considered incurred on the day that the employee’s pay is earned. Payroll costs incurred but not paid during the borrower’s last pay period of the covered period are eligible for forgiveness if paid on or before the next regular payroll date. See page 2 of the application and instructions for more details.

Which non-payroll costs are eligible for forgiveness?

Non-payroll costs that are eligible for forgiveness include:

  • Mortgage obligations
  • Rent obligations
  • Utility payments

An eligible non-payroll cost must be paid during the covered period or incurred during the covered period and paid on or before the next regular billing date. Eligible non-payroll costs cannot exceed 25 percent of the total forgiveness amount. See page 2 of the application and instructions for more details.

What documents will businesses need to submit to apply for loan forgiveness?

Each borrower must submit the following documents with the PPP loan forgiveness application:

  1. PPP Loan Forgiveness Calculation Form
  2. PPP Schedule A
  3. Payroll documentation
  4. Full Time Employee documentation
  5. Non-payroll documentation verifying the obligations/services

See page 10 of the application and instructions for more details.

PPP and paid sick leave

This month, the SBA also addressed the question of whether the Paycheck Protection Program covers sick leave. PPP loans cover parental, family, medical, and sick leave. However, the CARES Act excludes qualified sick and family leave wages for which a credit is allowed under the Families First Coronavirus Response Act. There is more information about determining the amount of the tax credit for qualified sick leave wages here.

Calculating your maximum PPP loan amount

The SBA offers step-by step instructions for all kinds of businesses and organizations that qualify for a PPP loan, including:

  • Self-employed and have no employees
  • Self-employed and have employees
  • Self-employed individual who reports my income on IRS Form 1040 Schedule F
  • In a business partnership
  • An S corporation or C corporation
  • An LLC
  • Eligible nonprofit organization
  • Eligible nonprofit religious institution, veterans organization, or tribal business

If you still have questions about the PPP loan forgiveness program, we can help. Milestone recently presented a webinar titled Understanding the SBA/PPP Loan Assistance Program. You can view the webinar video for free by visiting our resource center. You can also call Milestone at (716) 883-1833 or email

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