Using Your PPP Loan To Receive Full Forgiveness

On the surface, the guidelines for obtaining full forgiveness from your lender are straightforward. 

  • Spend at least 75% of your loan proceeds on maintaining your payroll. That means paying your staff rather than laying them off, or rehiring the staff that you already laid off at a wage similar to what you were paying them before.
  • You can spend the other 25% of your loan (or less) on rent, mortgage interest, and utilities.
  • All other uses of your loan are, as of this writing, ineligible for forgiveness.


  • Prior Rules: Use your loan within eight weeks of receiving the funding (The eight-week period begins on the date the lender makes the first disbursement of the PPP loan to the borrower.The lender must make the first disbursement of the loan no later than ten calendar days from the date of loan approval). THIS HAS BEEN CHANGED – YOU NOW HAVE UP TO 12/31/2020 TO USE YOUR LOAN to pay employees/contractors in order to have  loan forgiven.
  •  In addition the deadline for PPP applications has been extended to August 8th,  2020.

Be sure to document the use of your loan proceeds throughout the entire period and be ready to present evidence of how you spent your loan to your lender. When it comes time to apply for forgiveness, you’ll need to show documentation that backs up your claims. 

Loan forgiveness is not a binary thing, however. Your loan forgiveness can be reduced if you don’t spend your loan exactly as described above, but you will still receive some level of forgiveness if you use your loan on eligible costs. Spend all of your loan money on rent? That’s fine, but at most you’ll receive 25% loan forgiveness. 

There are other eligible uses for your PPP loan, including costs related to funding healthcare benefits and insurance premiums, and interest on debt that you’ve incurred before February 15, 2020. These costs are not forgivable, however. You also don’t have complete free rein with your loan—you can’t use it, as far as most analysis of the CARES Act has determined, to expand your operations or renovate your brick-and-mortar locations, for example.