Paycheck Protection Program (PPP) Loan Forgiveness FAQ

Dear FLCC Subscribers,

According to, 466,221 construction-related firms received a total of $64,568,137,994 in Paycheck Protection Program loans representing 12.38% of the overall loan program.  For the most part, we have heard companies using their PPP monies responsibly. The program helped many construction firms keep their top performers employed long enough to navigate through the unknowns and sustain business moving forward.  If you are one of the companies on the PPP receiving end the process now begins to ensure loan forgiveness of some or all of the funds.  HBK’s expert on PPP, Amy Reynalt, has prepared the below outline to help you navigate the process.

Paycheck Protection Program (PPP) Loan Forgiveness FAQ

By: Amy Reynallt, MBA

On October 8, 2020, the Small Business Administration (SBA), in conjunction with the Treasury Department, released a new application designed to simplify the Paycheck Protection Program (PPP) loan forgiveness process for some small borrowers.

SBA Form 3508S is intended for borrowers who received PPP loans of up to $50,000. However, if those borrowers and their affiliates received loans totaling at least $2 million, they are not eligible to use Form 3508S. Form 3508S simplifies the forgiveness process by eliminating the FTE and wage/salary reduction calculations. In an Interim Final Rule also released on October 8, the SBA and Treasury explained that these exemptions are allowable as de minimis exceptions to the CARES Act. Specifically, the SBA believes that most borrowers in this dollar range would not be affected by these reductions because they did not have FTE or wage/salary reductions, or they would otherwise qualify for the safe harbor options. Borrowers who do not fall into the under-$50,000 range should continue to use Form 3508 or Form 3508EZ applications. They should also stay alert to possible changes to forgiveness requirements through future legislation.

To obtain the SBA copy of the simplified application, instructions and related Interim Final Rule, visit:

On August 4, the Small Business Administration (SBA) and U.S. Treasury published 23 FAQs addressing aspects of the Payroll Protection Program (PPP), including payroll costs, nonpayroll costs, forgiveness reductions and other general information. FAQ highlights include:

  • Borrowers who submit their PPP loan forgiveness application within 10 months of the end of their “Covered Period” are not required to make payments until the forgiveness amount is remitted to the lender by the SBA. Borrowers receiving full forgiveness will not be responsible for any payments. A borrower receiving partial, or no forgiveness will be required to pay the remaining balance of the loan, plus interest accrued from the loan disbursement date.
  • Eligible payroll costs and eligible nonpayroll costs incurred before the Covered Period but paid during the Covered Period are eligible for loan forgiveness. Similarly, payroll costs and nonpayroll costs incurred during the Covered Period but paid after the Covered Period could also be eligible for forgiveness if they are paid on or before the business’s next regular payroll or billing date.
  • Borrowers with twice monthly or less frequent payroll schedules might need to calculate payroll costs for partial pay periods to determine eligible payroll costs.
  • The employer portion of group healthcare benefits paid or incurred during the Covered Period or “Alternative Payroll Covered Period” are eligible for forgiveness. Forgiveness will not be granted for group health benefits accelerated from periods outside the Covered Period or Alternative Payroll Covered Period.
  • Employer contributions for retirement benefits paid or incurred during the Covered Period or Alternative Payroll Covered Period are eligible for forgiveness. Forgiveness will not be granted for retirement benefits accelerated from periods outside the Covered Period or Alternative Payroll Covered Period.
  • Owner compensation is capped at $15,385 per owner for the 8-week period or $20,833 per owner for the 24-week period. The limitation applies across all businesses in which the owner has an ownership stake. Owners can choose how to allocate that amount across their businesses.
  • Most rules applying to owner compensation were covered in the Interim Final Rule on Loan Forgiveness Interim Final Rule and SBA Loan Review Procedures Interim Final Rule dated June 22, 2020. However, the FAQs include an additional clarification: health insurance contributions for S Corporation owners with at least a 2 percent stake in the business are not eligible for forgiveness, nor are the contributions for family members. Instead, these amounts are considered part of the owners’ cash compensation.
  • Interest on unsecured credit is not eligible for loan forgiveness, although it is a permissible use of PPP loan funds.
  • If an eligible organization has a rent or interest payment for a mortgage loan that existed prior to February 15, 2020, but is renewed or refinanced after that date, the lease payments under the renewed lease or interest payments on the refinanced mortgage are eligible for forgiveness.
  • Transportation, which is included as a utility eligible for forgiveness, is defined as ‘transportation utility fees assessed by state or local governments.” For more information on transportation utility fees, visit:
  • Electricity supply charges are eligible for loan forgiveness. According to the FAQ, “The entire electricity bill is eligible for loan forgiveness, which may include supply charges, distribution charges, and other charges such as gross receipts taxes.”
  • When considering the full-time equivalent (FTE) employee reduction related to forgiveness, borrowers may exclude reductions that occur due to, “(1) an inability to rehire individuals who were employees of the borrower on February 15, 2020, and (2) an inability to hire similarly qualified individuals for unfilled positions on or before December 31, 2020.” Within 30 days of the employee’s rejection of the offer to rehire, borrowers must inform the applicable state unemployment insurance office. In addition, borrowers must maintain documentation, which could include a written offer to rehire the individual, a written record of the employee’s rejection of that offer, and a written record of efforts to hire a similarly qualified individual.
  • Seasonal employers should use the same 12-week period they used for calculating the maximum loan for the reference period for calculating any loan forgiveness reduction.
  • When calculating the forgiveness reduction related to salary/hourly wages, borrowers should only consider decreases in salaries or wages (not all forms of compensation).

If you have further questions feel free to call Amy and her team at (330) 758-8613 or

To Your Forgiveness to Aid in Your Success,

Suzanne Breistol


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