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Federal relief
The Paycheck Protection Program (PPP)
PPP loan forgiveness calculator
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Managing cash flow
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FAQs
Your questions about managing cashflow and navigating relief, answered.
PPP loan proceeds can be used for payroll, as well as to pay for mortgage interest, rent, and utilities during the forgiveness period or incurred during the forgiveness period and paid on or before the next regular billing date. In addition, worker protection costs related to COVID-19, uninsured property damage costs caused by looting or vandalism during 2020 disturbances, and certain supplier costs and expenses for operations can also qualify for forgiveness. PPP loan proceeds can also be used for interest on other debt obligations, but those amounts aren’t forgivable.
No more than 40% of the loan forgiveness amount can be for nonpayroll expenses (such as mortgage interest, rent or lease payments, utilities, and others). Payroll expenses must be at least 60% of the forgiveness amount. Eligible rent and lease payments must be under an agreement signed before February 15, 2020. You elect which forgiveness period you would like to use (between eight and 24 weeks).
For more details, see question 12 in this full FAQ (PDF).
You decide which forgiveness period you prefer—any time between eight and 24 weeks from the date loan proceeds are disbursed.
Covered expenses (payroll, mortgage interest, rent, or utilities) are those that were paid or incurred during the forgiveness period. Payroll costs are considered paid on the day paychecks are distributed. Payroll costs are considered incurred on the day the employee’s pay is earned. If a cost is incurred but not paid during the final pay period of the forgiveness period, you can still count it in the forgiveness if you will pay it before the next regular payroll date.
Forgivable expenses include payroll, rent or lease payments, mortgage interest, and utilities. They can be paid or incurred within the forgiveness period, as long as ultimately they’re paid before the next regular billing date. In addition, worker protection costs related to COVID-19, uninsured property damage costs caused by looting or vandalism during 2020 disturbances, and certain supplier costs and expenses for operations can also qualify for forgiveness. Interest on the PPP loan begins accruing on the loan origination date, but interest accruing during (and for 10 months after the end of) the forgiveness period is also forgivable.
At least 60% of the amount forgiven must be used for payroll expenses but can be as high as 100%.
For loans exceeding $50,000, the amount of forgiveness may be subject to reduction if the employee head count or certain salary levels are reduced.
For full details see the PPP overview (PDF).
Due to changes made by the Consolidated Appropriations Act, 2021, the forgiven PPP loan is not taxable and any eligible business expenses are deductible (to the extent otherwise deductible), even if paid by a PPP loan that is later forgiven.
Payroll expenses include employer payments for employee benefits consisting of group healthcare coverage, group life, disability, vision, or dental insurance.
Employer contributions for these group and other benefits for employees aren’t counted in the $100,000 cap on compensation. Owners of C corporations are generally the only business owners permitted to add health care benefit costs to payroll.
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