PPP Forgiveness—What Are Eligible Payroll Costs?

PPP Forgiveness—What Are Eligible Payroll Costs?

Author: FNBO

Businesses who received Paycheck Protection Program (PPP) loans can apply for loan forgiveness through their financial institution. If a borrower receives a PPP loan, they must also apply for forgiveness of the loan or they will have to pay the loan back.

Borrowers are eligible for forgiveness in an amount equal to the sum of their eligible expenses during their chosen 8-week to 24-week Covered Period. To be considered for full forgiveness, borrowers must use at least 60% of their loan proceeds on payroll costs. Employee and compensation levels must also be maintained.

In this article, we review what may be considered as eligible payroll costs.

What are Payroll Costs?

To be considered for full loan forgiveness, borrowers use at least 60% of their loan proceeds on payroll costs during the chosen Covered Period. This may include:

• Employee salaries and wages
• Vacation, parental, family, medical or sick leave
• Employee health benefits
• Employer-paid retirement benefits
• Business mortgage interest payments
• Business rent or lease payments
• Business utility payments
• Covered operations expenditures
• Covered property damage costs
• Covered supplier costs
• Covered worker protection expenditures

Note, loan proceeds may not be used to pay employer Social Security, Medicare or Federal Unemployment taxes. Payroll costs also excludes workers compensation premiums, payments to independent contractors, and payments to employees for leave covered under the Families First Coronavirus Response Act.

Before applying for loan forgiveness, we suggest you familiarize yourself with all of the criteria here before applying. You also need to ensure you’ve spent all of your loan funds on eligible costs prior to applying for forgiveness and have documentation to support the use of proceeds during the Covered Period.

The FNBO customer portal is currently open to First Draw and Second Draw Forgiveness applications. Learn more here.

PPP Loan Forgiveness Resources

3508S Loan Forgiveness Application and Instructions

3508EZ Loan Forgiveness Application and Instructions

3508 Loan Forgiveness Application and Instructions

Loan Forgiveness Information