What to Know About Paycheck Protection Program Loan Forgiveness?

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Paycheck Protection Program

Similar to firms in other industries, restaurants increased their expenses in the week in which the loan funds were available. However, expenses did not increase by the same magnitude observed among all firms, with expense growth increasing from –60 percent to –28 percent in week 0. In week 25 expenses were 18 percent lower although balances were twice as high as in the prior year. Round one and Round two PPP loans stipulated that the period during which a business had to use its loan proceeds was an eight-week period beginning on the date the business received its loan proceeds. On March 30, 2021, the Paycheck Protection Program Extension Act was signed into law, which gave applicants until May 31, 2021, to apply for a PPP loan, extended the covered period to June 30, 2021, and gave lenders until that date to process loans. Based on the CARES Act, the first-draw PPP loans were available for the lesser of $10 million or 2.5 times a company’s average monthly payroll.

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Round three allowed a business to choose any length period between eight weeks and 24 weeks, giving it more control over how to handle any needed reductions in a workforce, once PPP funds were depleted. March 9, 2021, businesses with fewer than 20 employees were permitted to apply for PPP funding. Second-draw loans of up to $2 million were available for businesses that had used funds in their Round 1 or Round 2 loans. The U.S. Treasury and Small Business Administration are responsible for the rules of the program, which determine the amount of loan forgiveness you may receive. For additional assistance with PPP loan forgiveness documentation, view our documentation guide. Our decision to opt out of the SBA’s forgiveness portal will not impact the outcome of your forgiveness application. You will need to apply directly with Bank of America when you receive the Forgiveness invitation.

The Paycheck Protection Program

We find the short- and medium-term employment effects of the program were small compared to the program’s size. Third, many firms used the loans to make non-payroll fixed payments and build up savings buffers, which can account for small employment effects and likely reflects precautionary motives in the face of heightened uncertainty. Limited targeting in terms of who was eligible likely also led to many inframarginal firms receiving funds and to a low correlation between regional PPP funding and shock severity. Our findings illustrate how business liquidity support programs affect firm behavior and local economic activity, and how policy transmission depends on the agents delegated to deploy it. What is the period within which I must spend my loan proceeds to obtain full loan forgiveness?

What is paycheck protection program in the US?

The Paycheck Protection Program established by the CARES Act, is implemented by the Small Business Administration with support from the Department of the Treasury. This program provides small businesses with funds to pay up to 8 weeks of payroll costs including benefits.

If you rehire employees that were previously laid off at the beginning of the period, or restore any decreases in wage or salary that were made at the beginning of the period, you will not be penalized for having a reduction in employees or wages. For loans received in 2020, the deadline to do so was December 31, 2020.


On Feb. 22, 2021, the White House announced five changes to the Paycheck Protection Program . U.S. Treasury FAQwebsites for the latest information and guidance related to the Paycheck Protection Program. If a borrower operates out of a shared rental, it must prorate rent and utilities as it did on its 2019 tax filings . Business payments for a service for the distribution of electricity, gas, water, transportation, telephone or internet access for which service began before February 15, 2020. Treasury and SBA websites for the most up-to-date program rules and guidance. A completed Forgiveness application is necessary, in order to be eligible to submit a request for a SBA review.

Learn about the PPP, how you should prepare for the Loan Forgiveness phase, and what reports you will need from ADP. Learn more about Privacy at ADP, including understanding the steps that we’ve taken to protect personal data globally. At ADP, we are committed to unlocking potential — not only in our clients and their businesses, but in our people, our communities and society as a whole.

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