To qualify for loan forgiveness, the funds must be used on one or more of the following expenses billed or incurred in the 24-week period triggered after you received your loan:

• Payroll costs, including benefits
• Interest on mortgage obligations, where the mortgage obligations originated before February 15, 2020
• Rent, under lease agreements in force before February 15, 2020
• Certain utilities, for which service began before February 15, 2020

Payroll costs include:

• Salary, wages, commissions, or tips (capped at $100,000 on an annualized basis for each employee)
• Employee benefits, including costs for vacation, parental, family, medical, or sick leave; allowance for separation or dismissal; payments required for the provisions of group health care benefits, including insurance premiums; and payment of any retirement benefit
• State and local taxes assessed on compensation of employees
• For a sole proprietor or independent contractor: wages, commissions, income, or net earnings from self-employment, capped at $100,000 on an annualized basis for each employee

Yes. You will owe money when your loan is due if you use the loan amount for anything other than payroll costs, mortgage interest, rent, and utilities payments over the 24 weeks triggered after you received the loan. Payroll costs must represent at least 60% or the forgiveness amount.

You may also owe money if you do not maintain your staff and payroll, such as:

• Your loan forgiveness may be reduced if you decrease your full-time employee headcount.
• Your loan forgiveness may also be reduced if you decrease salaries and wages by more than 25% for any employee that made less than $100,000 annualized in 2019.
• You may be able to avoid a reduction in forgiveness if you restore your full-time employment and salary levels by December 31, 2020. You may also be able to avoid a reduction in forgiveness if you can document an inability to return to your standard level of business activity due to compliance with COVID-19 requirements or guidance issued by the Centers for Disease Control (CDC) or other specific federal entities.

No. You do not need to include employees who voluntarily resigned, requested reduced hours, or were fired for cause in your wage reduction calculation, provided you retain supporting documentation. You can also exclude employees who were fired or furloughed where you made a good-faith, written offer to rehire that was rejected by the employee. You may also be able to avoid a reduction in forgiveness if you can document an inability to return to your standard level of business activity due to compliance with COVID-19 requirements or guidance issued by the Centers for Disease Control (CDC) or other specific federal entities.

Proceeds that are not forgiven must be repaid pursuant to your promissory note, and can only be spent on the following:

• At least 60% of the loan proceeds must be used for payroll costs.
• The remaining 40% of loan proceeds may be spread across the following items only:
  • Mortgage interest payments (but not mortgage prepayments or principal payments);
  • Rent payments;
  • Utility payments;
  • Interest payments on any other debt obligations that were incurred before February 15, 2020

If you use PPP funds for unauthorized purposes, SBA will direct you to repay those amounts. If you knowingly use the funds for unauthorized purposes, you could be subject to additional liability such as charges for fraud.