1.  Can I apply for forgiveness before my 8 or 24 weeks is up?  

Many clients have contacted us asking “If I use all of my funds earlier than the 24 week covered period, should I apply early?” On Monday, the Small Business Administration released new guidance on how to apply for Payroll Protection Program loan forgiveness. This guidance includes clarification on early applications. Applicants can apply for forgiveness before the end of the full covered period, but doing so may reduce the amount of forgiveness if you’ve reduced employees’ wages or salaries by more than 25%. For additional information about this see Question #4 below.

2.  How long do I have to apply for forgiveness after the end of my covered period?

Per the guidelines, the deferral of payments on these loans is ten months from the end of the covered period. The borrower will determine the covered period, which is the period beginning when funds are received through either 8 or 24 weeks. Borrowers have ten months from the end of the covered period to apply for forgiveness before the Lending Bank can require the borrower to start making payments.   The Lender is required to notify the Borrower that payments are due at that time.

Once the application for forgiveness is submitted, the Lender will have 60 days to make the determination regarding forgiveness. The Lender will notify the SBA of the decision. During this time period of forgiveness determination, the loan payments are still deferred.

3. Will there be public disclosure of PPP loan recipients?

The Treasury Department and the SBA have released a statement about the detailed information that will be disclosed regarding PPP borrowers. Individual company details will not be disclosed for loans under $150,000. For loans in excess of that amount, business names, addresses and other demographic information will be disclosed along with the range of the loan amount.

4.  I’ve reduced my employees’ wages by more than 25%, have I reduced my forgiveness?

Per the guidelines, if an employer reduces salaries or wages by more than 25%, the amount of the reduction in excess of 25% would reduce the amount of loan forgiveness. For example, an employer reduced an employee’s weekly wages from $1,000 in February to $700 during their covered period, the employer would have to reduce the forgiveness by $50 per week for the full length of the covered period. The reduction in wages was 30%, greater than 25%. To calculate the reduction first determine the allowable reduction of wages amount of 25% of wages, $250. The reduction in wages beyond that allowable amount will reduce forgiveness, or $300 less $250.  With a 24 weeks covered period the reduction for this one employees would be $50 over the 24 weeks, or $1,200.

But, there is safe harbor to get around this reduction in forgiveness. If employers restore the wages and salaries for all employees that were reduced during the covered period, by December 31, 2020, those reductions in salaries will not impact forgiveness.   This is a self-certification safe harbor that is made in good faith with the application, but supporting documentation must be retained by the borrower to support this certification. The forgiveness application states:

Documentation supporting the certification that annual salaries or hourly wages were not reduced by more than 25 percent during the Covered Period … relative to the period between January 1, 2020 and March 31, 2020. This documentation must include payroll records that separately list each employee and show the amounts paid to each employee during the period between January 1, 2020 and March 31, 2020, and the amounts paid to each employee during the Covered Period …

If a PPP borrower applies for forgiveness early, they are not permitted to use this safe harbor. Any reduction in any employees’ salaries and wages in excess of 25% would have to be calculated and would reduce forgiveness accordingly. Under the current guidelines, there is little incentive to apply for forgiveness before the end of the borrower’s covered period.


We have created a PPP Task Force to support our clients in their PPP forgiveness process.  Our team can:

  • Prepare the application
  • Perform analysis of your self-completed application
  • Assist banks with their due diligence for reviewing the forgiveness applications
  • Provide guidance on the choice between the EZ application and the full application
  • Provide tax planning

If you are interested in assistance, please reach out to your Mitchell Wiggins team.