You Just Received Your PPP Loan Money. Now What?

April 17, 2020
SmithAmundsen Labor & Employment Alert

NOTE:  This is general information and should not be construed as legal advice.  New guidance is continually being published.  This information is only current through April 16, 2020.

So far, the CARES Act and related guidance published by the Treasury indicates that two general factors will be examined in determining forgiveness:

1: Were at least 75% of the funds spent on “payroll costs”?

2: Have you maintained the same headcount and salary levels for full-time equivalent (FTE) employees?

First factor to keep in mind:  AT LEAST 75% of the PPP Loan Proceeds were used on “payroll costs.

Next factor to keep in mind: Determining whether there’s a reduction in employee headcount OR in an employee’s salary.

What about the option to fix things?

What documentation should I be maintaining?

Summary: Things to Do and Keep in Mind


TOTAL Loan received of $645,421.00


A = ? (Possibly 14)**

(Average FTE employees per month during 8 weeks following receipt of loan proceeds)


B = 21

(Average FTE employees per month for the period of 2/15/19 to 6/30/19 OR 1/1/20 to 2/29/20)


66.7% = $430,281

(Potential percentage ratio/ $ eligible for forgiveness)


75% of  total loan amount = $484,065.75

(Minimum amount of loan that must be spent on “payroll costs”)


25% of total loan amount = $161,355.25

(Maximum amount of loan that may be spent on rent, lease, utilities, and/or mortgage interest)

Amount of loan to be repaid at 1% interest —>


Total loan proceeds less ratio described above

 ** Note that this example anticipates a scenario where wages are not paid to individuals in the event there is no work for them to perform with unemployment a better alternative for the individuals. If the estimated number for A increases, the amount of the loan available for forgiveness will also increase.

**Also note that this example does not account for any salary reductions for any individuals that earn less than $100k annually.