PPP Loan Forgiveness Estimator

Get an estimate of how much of your Paycheck Protection Program loan will be forgiven.

Key Factors That Affect PPP Loan Forgiveness

PPP loan forgiveness is determined through calculations with several factors. Don’t assume that just because you’ve received an SBA loan in the past that you will understand how a PPP loan works. This is a unique program with its own set of unique rules and terms. The following FAQs can help provide clarity into the terminology and rules associated with the program. You can also get additional information by visiting the PPP Loan Forgiveness page.

What Is the PPP Loan Amount?

The PPP loan amount is the total amount awarded to a borrower for their PPP loan. That amount was calculated based on 2.5 times a borrower’s average monthly payroll costs during the covered period.

What Are Payroll Costs?

Payroll costs for the loan forgiveness calculations are the portion of the PPP loan amount used to cover payroll costs during the 24-week covered period following disbursement of the loan.

Can Mortgage Interest, Rent, and Utilities Be Forgiven?

Following SBA guidance on allowed uses of the loan, no more than 40% of the PPP loan amount can be used toward mortgage interest, rent/lease, utility costs, covered operations expenditures, etc. Payments toward mortgage interest, rent or lease payments, and utility payments incurred during the 24-week covered period can be included in PPP loan forgiveness in these fields. Payments toward a mortgage principal are ineligible and should not be included.

You can use your PPP funds on any of these allowable uses:

  • Salary, wages, commissions, or tips
  • Employee benefits such as costs for vacation, parental, family, medical, or sick leave; allowance for separation or dismissal; payments required for the provisions of group healthcare benefits including insurance premiums; and payment of any retirement benefit
  • State and local taxes assessed on compensation
  • Wages, commissions, income, or net earnings from self-employment (for sole proprietors or independent contractors)
  • Interest on mortgage obligations incurred before February 15, 2020
  • Rent that was under lease agreements in force before February 15, 2020
  • Utilities for services that began before February 15, 2020
  • Costs for personal protective equipment and adaptive investments that help you comply with federal and/or health and safety guidelines related to COVID-19
  • Outlays for software, cloud computing, human resources, and accounting needs
  • Spending not covered by your insurance that is related to property damage due to public disturbances that occurred during 2020
  • Payments to suppliers that covered costs essential to the business operations at the time the outlay occurred

How Is the Loan Forgiveness Amount Calculated?

Forgiveness is equal to the sum of the following costs incurred and payments made during the 24-week period beginning on the date the loan is disbursed by the lender to the merchant. The amount of the loan that may be forgiven could be reduced proportionally should employees or wages be reduced in certain circumstances.

The forgiveness amount may not exceed the principal amount of the PPP loan. And the forgiveness amount may be reduced based on the reduction in the number of employees. It may also be reduced based on the reduction in salaries.

These reductions are not necessarily permanent. If a business laid off or reduced payroll beginning February 15, 2020, the business may eliminate the forgiveness reduction if the business rehires the laid-off employees or restores payroll amount by June 30, 2020.

What Does the ‘Covered Period’ Mean?

The covered period refers to a period in time between 8 weeks after the loan was disbursed until 24-weeks following disbursement of the loan.

What Does ‘Full-Time Equivalent Employees’ Mean?

Full-time equivalent employees (FTEs) is a calculation based on the hours worked for both full-time and part-time employees over a workweek. If an employer has a 40-hour workweek, an employee that works 40 hours during that week is 1.0 full-time equivalent employee.

What Is the 60% Payroll Requirement?

60% of the PPP loan amount must be used toward payroll costs. No more than 40% of the forgiven amount can be used for non-payroll costs like mortgage interest, rent, or utilities.

Will the Full Amount of the Loan Be Forgiven?

Borrowers should not anticipate full forgiveness of the PPP loan amount unless they fully comply with the requirements of the Paycheck Protection Program. In most cases, a portion of their PPP loan amount will be forgiven. If a borrower chose to take out a smaller loan amount that would only cover their payroll costs during the covered period and not mortgage interest, rent/lease payments, or utility payments, that borrower may be eligible for forgiveness of the total PPP loan amount.

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