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PPP Update: Loan Forgiveness FAQs

The Small Business Administration (SBA), in consultation with the Department of the Treasury (Treasury), recently released guidance with regard to the forgiveness of Paycheck Protection Program (PPP) loans in the form of frequently asked questions (the Forgiveness FAQs). The Forgiveness FAQs are divided into five sections, each of which are briefly outlined below. Although many of the questions addressed in the Forgiveness FAQs were touched upon, or addressed in their entirety, in previously released guidance, there are some new clarifications and helpful examples for how borrowers should calculate their PPP loan forgiveness amount. A copy of the Forgiveness FAQs can be found here.  

  • General Loan Forgiveness: The first section of the Forgiveness FAQs contains three general questions regarding the forgiveness application process. The response to the first question clarifies which application form should be used by sole proprietors, independent contractors and certain self-employed individuals. The second response provides that PPP lenders can accept electronic signatures and scanned copies of loan forgiveness applications and documents. The third clarifies whether payments must be made prior to the SBA remitting the forgiveness amount, if any.

  • Payroll Costs: The second section of the Forgiveness FAQs contains eight questions regarding payroll costs that are eligible for forgiveness and how to calculate certain eligible payroll costs. The questions cover topics such as forgiveness eligibility depending on when payroll costs were incurred or paid, how to calculate payroll costs for partial pay periods, how to calculate cash compensation, group health care benefits and retirement benefits that are eligible for forgiveness, and how to determine how much owner compensation is eligible for forgiveness. 

  • Non-payroll Costs: The third section of the Forgiveness FAQs contains seven questions focused on non-payroll costs that are eligible for forgiveness. The questions address, among other things, when non-payroll costs are incurred or paid, if the Alternative Payroll Covered Period applies only to payroll costs, and whether certain specific non-payroll costs are forgiveness eligible, such as certain types of interest and utility payments.

  • Forgiveness Reductions: The fourth section of the Forgiveness FAQs contains five questions addressing circumstances that will (or will not) reduce a PPP borrower’s loan forgiveness amount. This section also addresses how borrowers should calculate the reduction in their loan forgiveness amount arising from a reduction in full-time employees during the Covered Period and reductions in employee salaries and/or hourly wages. 

  • Economic Injury Disaster Loans: The fifth section of the Forgiveness FAQs contains three questions regarding how Economic Injury Disaster Loans should affect PPP loan forgiveness. 

Copyright © 2020 Robinson & Cole LLP. All rights reserved.National Law Review, Volume X, Number 226


About this Author

Michael F. Maglio Partner Finance + Public Finance  Commercial and Industrial Lending

Michael Maglio's practice is concentrated in the areas of commercial and corporate finance, asset-based lending, and other secured and unsecured lending. He is a member of the firm’s Business Transactions, Bankruptcy + Reorganizations, and Sustainability Groups.

Financing Transactions

Mike represents institutional lenders and borrowers in structuring, negotiating, and documenting complex single- and multiple-lender, single- and multiple-obligor, and single- and multi-tiered financing transactions. His experience includes the representation of senior lenders...

Taylor A. Shea Corporate & Transactional Law Robinson & Cole Hartford, CT

Taylor Shea represents privately and publicly held companies in all aspects of corporate and transactional law, including commercial finance transactions, private equity and venture capital transactions, mergers and acquisitions, and general corporate and commercial matters. She is a member of the firm's Business Transactions Group and its Manufacturing Industry Team. 

Commercial and Corporate Finance

Taylor has a robust commercial and corporate finance practice, representing clients in all aspects of secured and unsecured bank, mezzanine and other senior and subordinated lending. She represents borrowers, banks, funds and other lenders, which provides her with unique insight into how to best structure, negotiate and document financing transactions for her clients.

Taylor's lending practice also includes representation of lenders and commercial users in precious metal and base metal consignments and dollar finance transactions with primary and secondary precious metal refineries, jewelry manufacturers and reclamation companies.

General Corporate and Commercial Matters

Taylor regularly represents clients on general corporate and commercial matters. She knows the importance of understanding her clients’ businesses and the markets they serve, which enables her to provide practical and effective guidance. She has extensive experience representing clients in connection with commercial agreements and corporate governance matters. Taylor represents clients in a range of industries, with a particular focus on clients in the manufacturing industry.

Mergers and Acquisitions

Taylor has extensive experience representing corporate clients, equity sponsors and other privately owned companies in a wide range of merger and acquisition transactions, including leveraged buyouts. She is intimately involved in drafting and negotiating the acquisition and financing components of these transactions. Taylor also counsels sponsors and works closely with them in connection with investment purchase agreements, charter documents, stockholder agreements and operating agreements. As a trusted advisor, she provides sound advice and judgment to clients of all sizes.

Pro Bono

Taylor is a member of the firm’s Pro Bono Committee. She also serves as a volunteer attorney on pro bono matters, and frequently mentors junior associates in their pro bono endeavors.  

Endicott Peabody IV Kit Counsel Business Transactions
Of Counsel

Endicott Peabody IV (Kit) is a member of the firm’s Business Transactions Group. Kit has more than 16 years’ experience advising clients on transactional and general corporate matters. This includes significant work representing public and private companies across industries, private equity firms, commercial banks, other major lending institutions, and real estate developers in structuring, documenting and negotiating, complex M&A transactions; senior and junior lending transactions (secured, unsecured and multi-tranche financing); syndicated financing transactions; and problem and...

Jeffrey L. Volpintesta Business Transactions Robinson & Cole Stamford, CT

As a member of the firm's Business Transactions Group, Jeffrey Volpintesta works with companies on a variety of corporate transactions and securities matters. 

Mergers and Acquisitions

Jeffrey assists public and private companies with corporate transactions, including acquisitions and dispositions, equity financings, and other strategic transactions. He has helped several companies with their large-scale mergers and acquisitions.

General Corporate Services

Jeffrey’s practice involves providing advice on general corporate and...

Barrett P. Wilson-Murphy Business Transactions Attorney Robinson & Cole Boston, MA

Barrett Wilson-Murphy advises clients on legal matters relating to middle market domestic and international financings and restructuring transactions. He represents financial institutions, funds, finance companies and other providers of capital in various commercial loan transactions and in acquisition and private equity transactions. Barrett has experience working with clients with respect to mergers and acquisitions, corporate governance and compliance matters. He is a member of the firm’s Business Transactions Group. 

Business Transactions

Barrett counsels clients on a...