CARES Act – Paycheck Protection Program (PPP) Loan Forgiveness

The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law on March 27, 2020, by President Donald J. Trump. The CARES Act was created to protect the American people from the public health and economic impact of the Coronavirus’ pandemic also known as COVID-19. The Paycheck Protection Program (PPP) is a sub-section under the CARES Act, which was designed to provide small business owners with the financial support required to maintain their business afloat by providing them with funds to pay up to eight (8) weeks of payroll costs, including benefits. Also, business owners could use up to 25% of said funds to pay for the business’s operating expenses, for example, the business’ rent, mortgage interests, and utilities.

Section 1106 of the Cares Act allows for PPP loans to be eligible for forgiveness. PPP loans may be forgiven in its totality or only partially. The amount to be forgiven should be the amount equal to the sum of certain costs incurred and payments made during the eight-week period beginning on the date of the PPP funds were deposited into the business account. The amount of loan to be forgiven cannot exceed the principal amount of the financing made available under the applicable covered loan. However, the amount of forgiveness can be reduced if there is a reduction in the number of employees or a reduction of greater than 25% in wages paid to employees.


PPP loans are NOT automatically forgiven. Borrowers must complete an application and direct the same to their lenders. Some lenders may allow borrowers to submit their PPP loan forgiveness application electronically. The application for PPP loan forgiveness has the following components: (1) the PPP Loan Forgiveness Calculation Form; (2) PPP Schedule A; (3) the PPP Schedule A Worksheet; and (4) the (optional) PPP Borrower Demographic Information Form. All Borrowers must submit (1) and (2) to their Lender. In addition to the PPP loan forgiveness form, borrowers must also submit supporting documents evidencing that the PPP funds were used to pay their respective employees during the covered period, for example, payroll documents, bank statements, etc. If some of the funds were used to pay non-payroll costs, then borrowers must also submit documents supporting the payments evidencing those payments during the covered period, for instance, mortgage statements, rent payments, and utility bills. Eligible non-payroll costs cannot exceed 25% of the total forgiveness amount. For your Loan to be forgiven, the CARES ACT requires that the expenses be incurred and paid during the covered period, and it prohibits prepayment. The covered period must be the same as the PPP loan disbursement date.

Whether your PPP Loan is forgiven or paid in full, you must keep all PPP loan applications and loan forgiveness forms for at least 6 years after your loan is forgiven or fully paid.

Because the application for PPP loan forgiveness may be complex to fill out on your own, you should contact legal counsel to discuss any questions that you may have regarding your PPP loan.

Let us take care of obtaining your business’s PPP loan forgiveness, so that you can focus on growing your business with confidence. Our legal team is here for you and ready to help you get passed these difficult times.

“That was my way of getting through difficult times of low confidence – hard work.”
David Beckham