Although the intention behind the Paycheck Protection Program is to help small businesses, for those who did receive the PPP loan, the Additional Eligibility Criteria issued on April 14, 2020 leaves many unanswered questions when it comes to how forgiveness will work.

Banks are telling business owners with questions "We don't know." The Treasury continues to issue new guidance. Check back with this page regularly for updates.

I received the PPP loan, now what?

You made it through the difficult and confusing process of getting the PPP loan. Now you have a new worry: forgiveness.

What can I use the PPP loan for?

The PPP loan can only be used for four expense categories: payroll costs, business office rent, mortgage interest and utilities. It is to be used in the 8 week period starting the date the funds are disbursed.

75% or more of the PPP loan must be used for payroll costs which include:

  • Salary, wages, commissions, or tips (capped at $100,000 on an annualized basis for each employee);
  • Employee benefits including costs for vacation, parental, family, medical, or sick leave; allowance for separation or dismissal; payments required for the provisions of group health care benefits including insurance premiums; and payment of any retirement benefit; 
  • State and local taxes assessed on compensation; and
  • For a sole proprietor or independent contractor: wages, commissions, income, or net earnings from self-employment, capped at $100,000 on an annualized basis for each employee.

25% or less of the PPP loan can be used for:

  • Rent, under lease agreements in force before February 15, 2020 (note this does not include home office or personal rent expense); 
  • Interest on mortgage obligations, incurred before February 15, 2020;
  • Utilities, for which service began before February 15, 2020. Utilities include electricity, gas, water, transportation, telephone, and internet access.

Source: PPP Borrower Information Sheet

Note: Each stage of this process: 1) getting the loan, 2) paying it out and 3) requesting forgiveness, uses different math formulas. See the "Math: Loan vs. Paying vs. Forgiveness" section below for more information.

How does PPP loan forgiveness work? 


You are able to apply to the bank 60 days after you received the PPP loan funds and request forgiveness. Your loan may be forgiven in full or in part. Theoretically, you will have followed the rules above when spending your PPP loan funds and your entire loan will be forgiven. Any amounts that are not forgiven remain a low interest loan. The PPP loan terms are 2 years at 1% annual interest. Payments are deferred for 6 months. 

In reality, the rules and guidance are still being written and modified by the government. Banks may be left to make their own interpretation.

Your banker is the best person to ask how they will handle forgiveness. Unfortunately, many banks have no live person you can speak with about the PPP loan and if you do reach them, their answer may be "I don't know."

Uncertainty about a potentially large business debt is the last thing any business owner needs during this economic shut down.

Keep in mind, the purpose of the PPP loan is to make up the difference in lost revenues due the economic shut down, not to enrich businesses, not to support operations fully, not to provide cash flow past the 8-week period. Therefore, if you do not need the entire PPP loan, you do not need to spend the entire amount nor request it be entirely forgiven. If you applied anticipating your need would be greater but you needed less, you can return the portion you do not need.

Here is a 3 step plan for approaching forgiveness to manage the uncertainty and concern about amounts not being forgiven:

1. Ensure you are spending the PPP loan funds as directed by the Treasury and CARES Act

2. Keep meticulous records of your payments including supporting documentation, such as payment records and receipts.

3. As the owner, you will likely be paying a portion of the PPP loan to yourself for your own replacement income. The government cannot say how you spend money after it is paid to yourself. If you can afford to wait on paying some of your personal bills, by requesting some of your bills be deferred, you can hold the money you pay yourself in savings for 60 days until you find out how much will actually be forgiven.

Many lenders and creditors are allowing individuals to defer payments on rent, mortgage, car payments, etc. Once you have made it through the forgiveness process, you can then use money paid to yourself to catch up bills that have been deferred. This may give you small sense of security and control over this very uncertain process that you will have cash on hand to repay any unforgiven portion.


There are many scams out there related to the coronavirus, especially related to financial relief. Here are resources to help you avoid scams:

Bankrate: 3 types of coronavirus scams to watch out for
Federal Trade Commission (FTC): Coronavirus: Scammers Follow the Headlines
Yahoo: Coronavirus: 6 Scams to Watch Our For

DO NOT CLICK ON EMAIL LINKS! If you get an email about relief money go to the official government or charity website, verify the phone number, and avoid using any links or numbers in the email itself that may contain viruses or take you to a place to enter your personal information so it can be stolen. Beware many scams have email addresses that look official but are not. Many web pages will appear official and are not. Check and verify.

DISCLAIMER: Information provided here is for general education only. Please consult as needed with your tax professional, financial planner, banker and attorney to make the best decisions for your business and personal circumstances.


I am not satisfied with how this relief process is being handled. What can I do?

Contact your Congressperson! You can call, email, mail or tweet them. Let them know if you are a struggling business and have been unable to access any relief through the existing avenues. Tell them if your bank is refusing to take your PPP loan application. Let them know that if they are going to give unemployed individuals $600 extra per week, a disaster loan of $1k per employee is not helpful. 

You can use a program called Resistbot to quickly send messages to elected officials by text. Note, these messages could be viewed as spam.

Try Resistbot

You can contact your congressperson the old fashioned way. Find your U.S. senator and representative contact information below. 

Elected Officials
Back to main coronavirus resource page

Jennie Schottmiller is a CPA. She simplifies complicated topics for small business owners and helps them make business decisions with confidence. Jennie is also a licensed family therapist and runs a private practice in Pennsylvania.

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