This can happen for a number of reasons and we highly recommend that you review each of the items below before you submit your forgiveness application.
- You did not provide values or documentation for eligible payroll expenses. Your maximum forgiveness eligibility is dependent on how much of the loan you spent towards eligible payroll expenses. To qualify for full forgiveness you must spend at least 60% of the loan proceeds towards payroll expenses. If you spent 0% of the funds on eligible payroll expenses your maximum forgiveness eligibility would be 0%. For more information on maximum forgiveness amounts feel free to explore this article: How much of my PPP loan can be forgiven? For more information regarding eligible payroll expenses please review this article: What are eligible payroll costs?
- If you are a sole proprietor, self-employed individual, or contractor, you still need to provide values and documentation for payroll expenses to be eligible for forgiveness. We understand that you may not always have well documented payroll expenses because the money was used to pay yourself – please refer to guidance here on how to document your "payroll" as a sole proprietor.
- You reduced the number of your employees. The SBA reduces your total amount of loan forgiveness if the average weekly number of FTE employees you had during your Covered Period was less than during during the reference period that you chose. We recommend that you take a second look at the Employee section of the application to ensure that everything is correct before you submit your application, we also recommend that you review the FTE Reduction Safe Harbors. This article includes a lot of helpful information regarding FTE Reductions and the Safe Harbors that may apply: How does a reduction in full-time equivalent (FTE) employees affect my loan forgiveness?
- You reduced your employees wages. The SBA reduces your total loan forgiveness if certain employees average salary or hourly wage was reduced by more than 25% during the Covered Period as compared to the period of January 1, 2020 to March 31, 2020. We recommend that you take a second look at the Employee section of the application to ensure that everything is correct before you submit your application, we also recommend that you review the Salary/Hourly Wage Reduction Safe Harbor. Here is an article that includes a lot of helpful information about the Wage Reduction and the Safe Harbor that may apply: How does a reduction in my employees’ salary or wages affect my loan forgiveness amount?