On May 15, 2020, the Small Business Administration (SBA), in
consultation with the Department of the Treasury, released the
Paycheck Protection Program (PPP) Loan Forgiveness Application accompanied by
detailed instructions. The newly released application and
instructions provide key definitions and calculation instructions
that clarify some of the most frequently asked questions about how
borrowers can obtain full loan forgiveness.
The PPP, created by the Coronavirus Aid, Relief, and Economic
Security (CARES) Act, provides low-interest, forgivable loans to
small businesses affected by the COVID-19 pandemic. The PPP's
popularity stems from the fact that the full amount of the
principal is forgivable provided the borrower maintains the average
number of full-time equivalent employees (FTE) and full wages paid
to each employee. If a borrower does not maintain its average
number of FTEs or the wages of any employee, the forgivable amount
is reduced.
