FBP - Certified Public Accountants

PPP Loans

Written by Team FBPCPA

August 5, 2021

PPP—Now What?

Now is a good time to clear up any lingering questions you may have regarding PPP loans. Forgiveness periods are ending and the window for new loans has closed. Below we have broken down some of the main points that you need to know about filing for Forgiveness.

If you have also received Employee Retention Credit (ERC), you can still request forgiveness for your PPP loan if you paid wages not covered by that program. You can learn more about ERC in our recent blog, which can be found here.

The Covered Period

Businesses can choose their covered period anytime between eight weeks and 24 weeks. The covered period begins on the day the loan was disbursed. There is a 10-month grace period after the covered period in which the borrower can request forgiveness.


Borrowers can apply for forgiveness after all funds have been spent. For the loan, or part of the loan, to be forgiven, businesses must prove:

  • You used 60% of the funds to keep employees on payroll, including part-time employees, but not contract labor. Items allowed as part of payroll:
    • Wages (Capped at $100,000 per employee, employees making more qualify, but only $100,000 of their salary can be covered for forgiveness.)
      • Business owners are capped at $20,833 when using 24 weeks
    • Bonuses
    • Employer Paid Insurance and Benefits
    • Sick Leave and/or parental, family or medical leave
    • Payment of cash tips or equivalent
    • Vacations Pay
    • State or Local Tax Assessed on Employee Compensation


  • You used the remaining 40% for the following allowed business expenses:
    • Covered Operating Expenses
    • Business Mortgage Payments
    • Business Lease or Rent Payments
    • Covered Supplier Costs
    • Utilities
    • Protective Equipment
    • Property Damage in 2020 Due to Civil Unrest Not Covered by Insurance

Grace Period

As stated above, there is a 10-month grace period for PPP loans after the covered period before they either need to be forgiven or repayment begins (this is the date the loan is considered to have reached maturity. Though you can apply for forgiveness up to the date of maturity for the loan, it is best to apply early in case there are any issues.


You will not need to provide an itemized record of how the funds were spent. However, it is important to have these records if the Small Business Association (SBA) asks for them, keep your records for 6 years. In that case, you will need to account for expenditures. Below are examples of the records you may need to fill out the required forms:

  • Bank Account Statements
  • Third Party Payroll Statements (if used)
  • Tax Forms
  • Receipts/Invoices for Payroll and Operating Expenses
  • Copy of Lender Agreement for Business Mortgage/Lease Agreement


How it Works

Your lender should provide you with the correct forms to fill out to apply for forgiveness. Make sure you are in close contact with your lender and keep track of important dates.

After the correct forms are filled out by you, the borrower, they will be sent to the SBA. The SBA then decides if the loan qualifies for forgiveness. The good news is, according to the SBA, it has granted forgiveness to more than 99% of loans where requests have been submitted.

Your lender must notify you of the SBA’s decision regarding forgiveness. You have the right to appeal, if you feel you were declined in error.

If you have questions about allowable expenses for forgiveness, please contact us.

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