Forgivable Expenses
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Amount and Details
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Documentation to be Submitted
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Payroll costs
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Payroll costs paid and incurred during the Covered Period.
Payroll costs are considered paid on the day that paychecks are distributed, or the borrower originates an ACH credit transaction. Payroll costs are considered incurred on the day that the employee’s pay is earned. Payroll costs incurred but not paid during the borrower’s last pay period of the Covered Period are eligible for forgiveness if paid on or before the next regular payroll date. Otherwise, payroll costs must be paid during the Covered Period. Count payroll costs that were both paid and incurred only once.
Must be at least 60% of the forgiveness amount. Forgiveness amount will be reduced if the borrower reduced any employee salaries or hourly wages by more than 25% during the Covered Period as compared to the most recent full quarter before the Covered Period, unless prior salaries/wages are restored by 12/31/2020 (for a PPP loan made in 2020) or the last day of the Covered Period (for a PPP loan made in 2021).
Forgiveness amount will also be reduced if the borrower’s average weekly number of FTE employees during the Covered Period was less than during the borrower’s chosen reference period (can be 2/15/2019 – 6/30/2019; 1/1/2020 – 2/29/2020; or for seasonal employers, either of the preceding periods or a consecutive 12-week period between 2/15/2019 and 2/15/2020). The reduction will not apply if the borrower reduced its FTE employee levels from 2/15/2020 through 4/26/2020 and then restored its FTE employee levels by 12/31/2020 (for a PPP loan made in 2020) or the last day of the Covered Period (for a PPP loan made in 2021) in the pay period that included 2/15/2020. Employees who were fired for cause, who voluntarily resigned, or who voluntarily requested and received a reduction of their hours will not be counted against the borrower. Any positions for which the borrower made a good-faith, written offer to rehire an employee or to restore any reduction in hours during the Covered Period which was rejected by the employee will also not be counted against the borrower. If a borrower can, in good faith, document an inability to hire similarly qualified employees for unfilled positions on or before 12/31/2020 (for a PPP loan made in 2020) or the last day of the Covered Period (for a PPP loan made in 2021), the reduction in FTE employees will not be counted against the borrower.
The borrower is also exempt from the reduction in loan forgiveness based on a reduction in FTE employees described above if the borrower, in good faith, is able to document that it was unable to operate between February 15, 2020, and the end of the Covered Period at the same level of business activity as before February 15, 2020, due to compliance with requirements established or guidance issued between March 1, 2020, and December 31, 2020 (for a PPP loan made in 2020), or the last day of the Covered Period (for a PPP loan made in 2021), by the Secretary of Health and Human Services, the Director of the Centers for Disease Control and Prevention, or the Occupational Safety and Health Administration, related to the maintenance of standards for sanitation, social distancing, or any other worker or customer safety requirement related to COVID-19.
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Documentation verifying the eligible cash compensation and non-cash benefit payments from the Covered Period consisting of each of the following:
- Bank account statements or third-party payroll service provider reports documenting the amount of cash compensation paid to employees.
- Tax forms (or equivalent third-party payroll service provider reports) for the periods that overlap with the Covered Period:
- Payroll tax filings reported, or that will be reported, to the IRS (typically, Form 941); and
- State quarterly business and individual employee wage reporting and unemployment insurance tax filings reported, or that will be reported, to the relevant state.
- Payment receipts, cancelled checks, or account statements documenting the amount of any employer contributions to employee health insurance and retirement plans that the Borrower included in the forgiveness amount.
Documentation showing the average number of FTE employees on payroll during the borrower’s chosen reference period. Documents may include payroll tax filings reported, or that will be reported, to the IRS (typically, Form 941) and state quarterly business and individual employee wage reporting and unemployment insurance tax filings reported, or that will be reported, to the relevant state. Documents submitted may cover periods longer than the specific time period. Borrowers that submit the EZ form of application because they did not reduce the salaries or wages of their employees by more than 25% during the Covered Period compared to the most recent full quarter before the Covered Period, and were unable to operate during the Covered Period at the same level of business activity as before February 15, 2020, as a result of health directives related to COVID-19 must provide the average number of FTE employees on payroll employed by the borrower on January 1, 2020, and at the end of the Covered Period.
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Covered mortgage obligations
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Payments of interest on any business mortgage obligation on real or personal property incurred before 2/15/2020.
Must be paid during the Covered Period or incurred during the Covered Period and paid on or before the next regular billing date, even if the billing date is after the Covered Period. Count covered mortgage obligations that were both paid and incurred only once.
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Copy of lender amortization schedule and receipts or cancelled checks verifying eligible payments from the Covered Period; or lender account statements from February 2020 and the months of the Covered Period through one month after the end of the Covered Period verifying interest amounts and eligible payments.
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Covered rent obligations
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Business rent or lease payments pursuant to lease agreements for real or personal property in force before 2/15/2020.
Must be paid during the Covered Period or incurred during the Covered Period and paid on or before the next regular billing date, even if the billing date is after the Covered Period. Count covered rent obligations that were both paid and incurred only once.
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Copy of current lease agreement and receipts or cancelled checks verifying eligible payments from the Covered Period; or lessor account statements from February 2020 and from the Covered Period through one month after the end of the Covered Period verifying eligible payments.
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Covered utility payments
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Business payments for a service for the distribution of electricity, gas, water, transportation, telephone, or internet access for which service began before 2/15/2020.
Must be paid during the Covered Period or incurred during the Covered Period and paid on or before the next regular billing date, even if the billing date is after the Covered Period. Count covered utility obligations that were both paid and incurred only once.
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Copy of invoices from February 2020 and those paid during the Covered Period along with the associated receipts, cancelled checks, or account statements verifying those eligible payments.
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Covered operations expenditures
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Payments for any business software or cloud computing service that facilitates business operations, product or service delivery, the processing, payment, or tracking of payroll expenses, human resources, sales and billing functions, or accounting or tracking of supplies, inventory, records and expenses.
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Copy of invoices, orders, or purchase orders paid during the Covered Period and receipts, cancelled checks, or account statements verifying those eligible payments.
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Covered property damage costs
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Costs related to property damage and vandalism or looting due to public disturbances that occurred during 2020 that was not covered by insurance or other compensation.
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Copy of invoices, orders, or purchase orders paid during the Covered Period and receipts, cancelled checks, or account statements verifying those eligible payments, and documentation that the costs were related to property damage and vandalism or looting due to public disturbances that occurred during 2020 and such costs were not covered by insurance or other compensation.
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Covered supplier costs
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Expenditures made by a borrower to a supplier of goods for the supply of goods that (A) are essential to the operations of the borrower at the time at which the expenditure is made; and (B) is made purchase to a contract, order, or purchase order (i) in effect at any time before the Covered Period; or (ii) with respect to perishable goods, in effect before or at any time during the Covered Period.
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Copy of contracts, orders, or purchase orders in effect at any time before the Covered Period (except for perishable goods), copy of invoices, orders, or purchase orders paid during the Covered Period and receipts, cancelled checks, or account statements verifying those eligible payments.
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Covered worker protection expenditures
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Operating or capital expenditures to facilitate the adaptation of the business activities to comply with requirements established or guidance issued by federal, state, or local government related to the maintenance of standards for sanitation, social distancing, or any other worker or customer safety requirement related to COVID-19.
Examples include the purchase, maintenance, or renovation of assets that create or expand (A) a drive-through window facility; (B) an air pressure ventilation or filtration system; (C) a physical barrier such as a sneeze guard; (D) an expansion of additional indoor, outdoor, or combined business space; and (E) health screening capability. Other examples include the purchase of particulate filtering facepiece respirators and other kinds of personal protective equipment.
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Copy of invoices, orders, or purchase orders paid during the Covered Period and receipts, cancelled checks, or account statements verifying those eligible payments, and documentation that the expenditures were used by the borrower to comply with applicable COVID-19 guidance during the Covered Period.
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