Remember the 60/40 rule. The SBA may forgive 100% of the loan as long as you use at least 60% of the money for payroll costs within a period of 8 weeks or 24 weeks (your choice)—beginning on the day the PPP funds were deposited in your business bank account.
To qualify for full forgiveness, the remaining loan funds (up to 40%) must be spent on eligible non-payroll business costs.
Now all business have a choice of an 8-week or 24-week covered period on which to base your forgiveness calculation (including previous PPP loan recipients).
For both a first-time or second draw PPP, your loan forgiveness can be reduced if—during your 8- or 24-week forgiveness period—you have reduced the number of employees, or reduced employee salaries by more than 25%.
However, there are certain safe harbors that apply that can exempt you from forgiveness penalties, in such situations as an employee refusing to accept an offered position. The new law also provides some more lenient forgiveness details:
Forgiveness is not automatic. You must apply to your lender for forgiveness. However, if your loan was for less than $150,000, the SBA will provide a simplified one-page application process for loan forgiveness.
If you also receive or received an EIDL (Economic Injury Disaster Loan) advance from the SBA, your amount of PPP loan forgiveness will not be reduced by the amount of the EIDL advance.
