SBA Issues FAQs on Forgiveness of Paycheck Protection Program Loans


By Mary Kay Shaver of Varnum LLP
Published August 5, 2020; originally published here

The Small Business Administration (SBA) released its Frequently Asked Questions (FAQs) on PPP Loan Forgiveness on August 4, 2020 which provide further clarification on loan forgiveness of Paycheck Protection Program (PPP) loans, including the following:

  • A borrower will not have to make any payments (principal or interest) for the portion of the PPP loan that is forgiven so long as the borrower timely submits its forgiveness application;
  • Payroll costs incurred before, but paid during, the covered period (or alternative payroll covered period, if applicable) are eligible for forgiveness;
  • Gross amounts should be used when calculating the cash component of payroll costs;
  • Tips, commissions, bonuses and hazard pay are eligible payroll costs;
  • Expenses for group health benefits and employee contributions for retirement benefits accelerated from periods outside the covered period (or alternative payroll covered period, if applicable) are not eligible for forgiveness;
  • Interest on unsecured credit is not eligible for forgiveness;
  • Rent payments on leases that were renewed and interest payments on mortgage loans that were refinanced are eligible for forgiveness if the original lease and mortgage loan was in existence prior to February 15, 2020;
  • Covered utility payments for transportation only includes transportation utility fees assessed by state and local governments;
  • The FTE Reduction Exception in Table 1 of the PPP Schedule A Worksheet can include employees listed in Table 2 of the PPP Schedule A Worksheet (those making more than $100,000 in 2019).


Mary Kay ShaverMary Kay Shaver is a Partner with Varnum LLP. She has a diverse practice focusing on public finance, corporate finance and creditors' rights issues. In the area of municipal finance, she advises clients on tax-exempt financing issues, establishing special taxing districts, election procedures and "blue sky" law issues, and acts as bond counsel, underwriter's counsel, bank's counsel and issuer's counsel in various tax-exempt and taxable bond transactions. She can be reached at or 616.336.6755.