Eligible payroll costs for the PPP are wages where the employer is remitting payroll taxes. From there, you can include your related payroll expenses, such as group health insurance premiums, retirement contributions, state and local payroll taxes, vacation pay, paid sick leave, and severance.

How do you calculate the PPP loan forgiveness?

Divide the Covered Period value by the Lookback Period value. If the result is 0.75 or greater, this employee will not affect your forgiveness amount and can be excluded. If the result is less than 0.75, multiply the Lookback Period value by 0.75 and subtract the Covered Period value.

When do you pay payroll on a PPP loan?

Yes, if the payroll costs are paid on or before the next regular payroll date after the Covered Period or Alternative Payroll Covered Period. Example: A borrower received its loan before June 5, 2020 and elects to use a 24-week Covered Period.

How much can you pay for PPP loan forgiveness?

Their payroll costs will cover $16,000 of forgiveness; they will need to submit at least $9,000 eligible non-payroll expenses to qualify for full forgiveness. If the percentage is less than 60%, your maximum PPP forgiveness amount will be reduced. The reduced amount is 60% of your total payroll costs.

What are the income limits for a PPP loan?

For a sole proprietor or independent contractor: wages, commissions, income, or net earnings from self-employment, capped at $100,000 on an annualized basis for each employee. Does the PPP cover paid sick leave? Yes, the PPP covers payroll costs, which include employee benefits such as costs for parental, family, medical, or sick leave.

Can a contractor apply for a PPP loan?

No. Independent contractors have the ability to apply for a PPP loan on their own, so they do not count for purposes of a borrower’s PPP loan forgiveness. Remember that at least 75 percent of the PPP loan proceeds shall be used for payroll costs.