PPP Loan Recipient Resources

(as of May 26, 2020)

Congratulations for getting your PPP loan!

Take these 3 Steps now


1. Set up a separate bank account for the funds.  

2.  Make a plan for how you will spend the funds in accordance with the restrictions imposed by the loan program


3. See our Guide to PPP Loan Forgiveness below with a calculator to ensure you can maximize the amount forgiven 

AFC Guide to PPP Loan forgiveness

The loan is a 1% loan a two-year term and payments deferred until 6 months.  8 weeks after the cash is in your bank account, the borrower must submit a forgiveness application to the lender to make the case that it meets the requirements to have the loan forgiven. 

OMB has issued guidance that the proceeds of a PPP loan that are forgiven will not be subject to Single Audit requirements. There has been no guidance from OMB, however, it is our recommendation that you do NOT use PPP loan funds to pay payroll costs for employees already funded with federally funded grants.

If you received an Economic Impact Disaster Loan advance from the SBA after receiving your PPP proceeds, your loan forgiveness amount will be reduced by $10,000 and the funds from the EIDG will need to be repaid to your bank.  Proceeds from the EIDL program will be subject to Single Audit requirements under 2CFR200.

On May 13, the SB issued updated guidance that their warning to companies applying for PPP Loan when they had other sources to draw from only applies to loans over $2 million. 

Background:On April 27, the SBA issued a warning to all PPP loan recipients that they must be prepared to defend that they meet a strict interpretation of the certification on the application that states "this loan is necessary to support ongoing operations."  There is a safe harbor if you determine that you don't meet the updated criteria, the funds can be returned by May 14 without penalty. 

For all PPP Loans: loan forgiveness is based on 2 steps:

Step 1 - Spend funds on eligible costs with at least 75% spent on payroll costs:


An eligible recipient shall be eligible for forgiveness of indebtedness on a covered loan in an amount equal to the sum of the following costs incurred and payments made during the 8 week “covered period”:  (CARES ACT Section 1106 (b)) 


(1) Payroll costs as defined in the act which are:

  • Wages with a cap of a rate of $100,000 annual salary per employee

  • State and Local employer taxes (typically unemployment insurance tax)

  • Health Insurance (the portion funded by the employer)

  • Retirement Expense (the portion funded by the employer)

(2) Any payment of interest on any covered mortgage obligation (which shall not include any prepayment of or payment of principal on a covered mortgage obligation).

(3) Any payment on any covered rent obligation.

(4) Any covered utility payment with utilities defined as(CARES ACT Section 1106 (a)) 

  • Electricity

  • Gas

  • Water

  • Transportation

  • Telephone

  • internet access 


In addition to spending the funds on allowable costs, the borrower must spend at least 75% of the funds for which they apply for forgiveness on payroll (per SBA FAQs and interim rule)

Step 2 - Loan forgiveness is also dependent on maintaining or restoring headcount:


The amount of loan forgiveness will be reduced if the borrower reduces headcount or reduces the wages of an individual employee by more than 25% from their rate on February 15, 2020. 

There is a major exception to this loan forgiveness calculation and that is if you laid-off workers between February 15, and April 26, 2020, and you restore their jobs and wages (up to 75% of prior wage) loan forgiveness is restored.  

Here's how to calculate your headcount:


The amount eligible for forgiveness is reduced by multiplying the forgiveness amount by the following calculation:(CARES ACT Section 1106 (d)(2)) 


The quotient obtained by calculating the total number of hours worked by each employee during the 8-week period from the date the loan originated, dividing that number by 8 for each employee to obtain the average weekly hours for the period.  If the number is greater than 40 hours per week, the FTE will be 1.  For all employees with hours less than 40 hours per week, add their hours together and divide by 40 which will be the FTE number for your part-time employees.  Add the number of full-time FTEs to the part-time FTE number to calculate the total FTES.


The 8-week FTEs will be divided by either:(at the borrower’s choice)

The average number of FTEs per month from February 15, 2019, through June 30, 2019,


The average number of FTEs per month from January 1, 2020, through February 29, 2020

(seasonal employers can use any consecutive 8-week period between May 1 and September 30, 2019 as their base period.)

The SBA will grant exceptions to the FTE rule, including headcount reductions resulting from employees who were laid off refusing the come back to work as well as employees who voluntarily left employment or were fired for cause.  


Documentation will need to be provided with the loan forgiveness application to support the information provided.  This will include payroll registers for the 8-week covered period and the base period, copies of invoices and cancelled checks for all payments for employee benefits, utilities, lease and mortgage interest payments.  Documentation will also be required to show that the services paid during the covered period were in place as of February 15, 2020.

Download the AICPA's Loan Forgiveness Calculator

issued by the AICPA May 20, 2020

AFC Annapolis

1125 West Street, Annapolis, Maryland 21401

202.386.6433   |  info@advisorsforchange.com

AFC Austin

801 Barton Springs Road, Austin, Texas 78704

512.337.6393  |   info@advisorsforchange.com

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