Prepare for Paycheck Protection Program loan forgiveness

The U.S. Department of the Treasury and the Small Business Administration (SBA) have not published official guidance around Paycheck Protection Program (PPP) loan forgiveness. Details around loan forgiveness are in the works, and we’ll update information as soon as it’s available. In the meantime, you can start preparing for loan forgiveness by tracking your spending on eligible payroll expenses.

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How to apply for PPP loan forgiveness

Your loan may be forgiven, in whole or in part, if you meet the requirements outlined by the SBA. If you applied for a PPP loan within QuickBooks Capital or a different SBA-approved lender, the following steps will make it easy to get started.

Regulations and guidance from the SBA and the U.S. Department of the Treasury on the PPP are evolving rapidly. Please refer to the latest guidance from the SBA and Treasury to confirm current program rules and how they apply to your particular situation.

Apply for a Paycheck Protection Program loan

Understand loan forgiveness

Get guidance on the most important Paycheck Protection Program loan forgiveness topics.

Intuit loan forgiveness calculator

Estimate PPP loan forgiveness based on your business info. You’ll need to provide amounts or estimates for the following:

  • Average monthly payroll costs
  • Other monthly expenses (mortgage interest, rent, and utilities)
  • Loan forgiveness may be reduced if you’ve reduced employee headcount or wages.
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What’s considered a forgivable expense?

To be eligible for forgiveness, your PPP loan must be used on eligible expenses within the 8-week period after your lender sent you funds. You don’t have to use all of your loan proceeds during that time; however, amounts you spend after this 8-week period will not be forgivable.

75/25 guidelineTo help maximize your forgivable amount, you should spend at least 75% of your PPP funds on eligible payroll costs. These include:
  • Cash compensation, capped at $15,385 for each employee making more than $100,000 annually, including:
  • Salary, wages, commissions, or similar compensation, as well as cash tips, or equivalent. Payroll expenses are calculated on a gross basis, without subtracting federal taxes that are imposed on the employee or withheld from employee wages
  • Employee benefits, including payment for vacation, medical, family, parental and sick leave
  • Separation or dismissal pay
  • Group healthcare benefits and insurance premiums
  • Payment of any retirement contributions
  • Payment of certain state and local taxes assessed on compensation
Up to 25% of the forgivable amount can be spent on:
  • Business mortgage interest payments on mortgages in effect before February 15, 2020
  • Rent payments on leases dated before February 15, 2020
  • Utility payments for electricity, gas, water, transportation, telephone, or internet access under service agreements dated before February 15, 2020
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How to track your PPP spending in QuickBooks

To request PPP loan forgiveness, you need to prove that you’ve spent your loan on eligible payroll costs and other forgivable expenses. That’s why it’s important to manage your spending in QuickBooks. Record your expenses, checks, or bills. Continue paying your employees. If you want to see what you’ve already spent, simply run a report and review to make sure it captures your eligible spending.

Learn how to track expenses
Track PPP spending
How to prepare for PPP loan forgiveness
1. Pay employees

You should have the same average number of full-time equivalent employees on the payroll as you did between February 15, 2019, and June 30, 2019. If your business wasn’t open between those dates, you must maintain the number of employees you had between January 1 and February 15, 2020. If you’ve laid off employees or reduced headcount since February 15, 2020, you’ll need to rehire them before June 30, 2020, otherwise the forgivable amount may be reduced.

2. Maintain employee salaries and wages

PPP loans cover annual eligible payroll costs up to $100,000 per employee. If you reduce employee pay by 25% or more, your forgivable amount may be reduced. If you’ve already reduced salaries and wages for employees who earn $100,000 or less on an annual basis, restore each worker’s normal salary and wages.

3. Spend your loan on eligible costs

Keep an accurate record of employee payroll costs, stay organized, and track your spending. To maximize your forgiveness amount, you should spend at least 75% of the forgivable amount on eligible payroll costs. You should not use more than 25% on eligible non-payroll expenses.

4. Spend your loan within 8 weeks

You don’t have to spend your full loan in the 8-week period after you received it. However, amounts spent after this 8-week period won’t be forgivable. Any amount of funding that isn’t forgiven is subject to your PPP loan terms (2 years with a 1% interest rate).

What happens if my loan wasn’t fully forgiven?

The remaining balance needs to be repaid over a 2-year period. Your first payment won’t be due until 6 months after you received funds but the loan will accrue interest at 1% starting from the date your lender sent the loan.

We’re still awaiting final guidelines on forgiveness from the U.S. Treasury and SBA.

loanfrorgivness repay

How to prepare for loan forgiveness applications

You’ll need to gather the following information to apply for Paycheck Protection Program loan forgiveness:

  • Payroll costs paid in the 8-week period after your lender sent you funds
  • Employee pay rates
  • Cancelled checks, payment receipts, transcripts of accounts, or other documents verifying payments on mortgage interest payments, rent or lease payments, and utility payments in the 8-week period after your lender sent you funds
  • Number of employees on the payroll
  • Payroll tax filings
  • State income, payroll, and unemployment insurance filings
  • Documentation of any advance received under the CARES Act EIDL Emergency Grant program

If you’re a Schedule C filer, you need the following information to apply for loan forgiveness:

  • Payroll tax filings and state income, payroll and unemployment insurance filings (if you have employees)
  • 2019 Form 1040 Schedule C that was provided to your lender at the time of your PPP loan application
  • Documentation of any advance received under the CARES Act EIDL Emergency Grant program
  • Cancelled checks, payment receipts, transcripts of accounts, or other documents verifying mortgage interest payments, rent or lease payments, and utility payments (if you claimed or are entitled to claim a deduction for such expenses on your 2019 Form 1040 Schedule C) for the 8-week period after your lender sent you funds

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Frequently asked questions

Check out additional frequently asked questions to learn more about the Paycheck Protection Program.