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PPP Loan Forgiveness: Rules & Guidelines

The SBA will forgive most PPP loans if the funds were used to cover approved payroll costs and some other costs of running a business. Find out if you qualify for forgiveness and how to apply.

    Erica Seppala
  • UPDATED

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Erica Seppala

Erica Seppala

Expert Analyst & Reviewer at Merchant Maverick
An expert in accounting, finance, and point of sale, Erica has been researching and writing about all things small-business since 2018. Erica's insights into personal and business finance have been cited in numerous publications, including MSN, Real Simple, and Reader's Digest. She is a graduate of Limestone College.
Erica Seppala
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112 Comments

Responses are not provided or commissioned by the vendor or bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the vendor or bank advertiser. It is not the vendor or bank advertiser's responsibility to ensure all posts and/or questions are answered.

    gina devecchis

    Hello…great article and comments and responses are very helpful.
    If we are in the fashion jewelry industry and we subscribe to a service that provides us with e-mails alerting us to upcoming design trends can that be included? Does a contracting with a consulting agency that helps develop creative strategies to help us attract new audiences or hold on to existing customers count as covered operational expenditures? You did say accounting fees – we would need to go back and pull out the costs directly attributable to the PPP original application as well as the forgiveness application and use that amount along with submission of the invoice and cancelled checks?
    Your thoughts would be greatly appreciated.
    Thank-you.

      Jessica Dinsmore

      Hi Gina,

      Based on SBA guidance for what falls under operations expenditures, it is unlikely that email alerts and consulting agency fees would be covered. The examples given by the SBA include business software used for facilitating operations, delivery of products, HR, payroll processing, etc. We don’t think these would fall under any of that. If you want, you can always reach out to your lender or the SBA for clarification. As for the last part of your question, if you are asking if your accounting fees for shuffling through the PPP stuff would be covered, we believe they would. Hope that helps, and we wish you all the best!

        Gina

        Thanks. I appreciate you taking the time to give me your thought.

          Barbara

          In regards to utility cost, the majority of our utility bills service period covers cross over months. For example, the bill received in February covers the service period Jan 9th through Feb 5th. If our covered period begins Feb 1st, how do I account for this cost?

            Jessica Dinsmore

            Hi Barbara,

            Per SBA guidance, nonpayroll costs are covered that were incurred OR paid during the covered period. If the bill was received and paid during their covered period, you shouldn’t have to calculate anything, as this would be a qualifying expense.

              Tracy

              Question, we were granted the first PPP Loan and not the Second one. The majority of our employees are 1099 employees – hence being approved for first loan and not second one. We were informed all of the 1099 employee’s wages paid cannot be used for forgiveness. Is this correct?

              Second Question: We have a corporate apartment in the name of the company. Can we use this expense we pay when providing expenses spent?

                This comment refers to an earlier version of this post and may be outdated.

                Erica Seppala

                Hi Tracy!

                That is correct. Wages paid to 1099 workers can’t be used when calculating loan forgiveness.

                Based on guidance from the Treasury, I would say that the expenses for the corporate apartment would not be eligible for loan forgiveness. Rent and utilities are covered if they are used in a space that is used solely for business purposes. Examples would be a storefront, office, or even a warehouse that is used solely for storing business equipment. I haven’t seen any information from the SBA or the Treasury that indicate that expenses associated with a corporate apartment would qualify for loan forgiveness. Of course, you can always reach out to your lender directly to inquire about any special circumstances. Good luck!

                  This comment refers to an earlier version of this post and may be outdated.

                  E Landau

                  Please advise if monthly fees paid to an accounting firm is eligible for PPP Forgiveness.
                  Thank you.

                    This comment refers to an earlier version of this post and may be outdated.

                    Erica Seppala

                    Hi there!
                    Under the SBA’s rules for the PPP loan, accounting services are a covered operational expense. When applying for forgiveness, make sure to include proper documentation of accounting fees that were paid. Per the SBA, documentation may include “invoices, orders or purchase orders paid, and receipts, cancelled checks or account statements.” Good luck!

                      This comment refers to an earlier version of this post and may be outdated.

                      Julie Bushor

                      I have a question regarding covered supplier costs. Are we able to include costs for materials needed in production or equipment repairs, as long as the purchase order was before the covered period (we do not have perishable items), but paid during the covered period? I just need a better understanding of what I can use in this category. Thanks.

                        This comment refers to an earlier version of this post and may be outdated.

                        Erica Seppala

                        Hi Julie!

                        According to the SBA, supplier costs are covered if the supplies being purchased are essential for the business. Additionally, the SBA says that payments made to “suppliers of goods pursuant to contracts, orders, or purchase orders in effect before the covered period” are covered. If the purchase order was in place prior to the covered period and the supplies were essential to your business, this should be a forgivable expense, even if the payment was made during the covered period.

                          This comment refers to an earlier version of this post and may be outdated.

                          Julie Bushor

                          Thank you so much.

                            This comment refers to an earlier version of this post and may be outdated.

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