1. PPP Loan Forgiveness Help Center
  2. Forgiveness Application Questions

Do I qualify for the Salary/Hourly Wage Reduction Safe Harbor?

Typically, if you reduce an employee’s salary or wages in excess of 25 percent it will result in a reduction in the loan forgiveness amount.

However, if you reduced, then restored salary/hourly wages, and meet the criteria below, you do not need to subtract these reductions from your overall requested forgiveness amount:

  • You reduced employee salaries and wages between February 15, 2020 and April 26, 2020 (the safe harbor period)
  • But you eliminated those reductions by December 31, 2020 (or, for a PPP loan made on or after December 27, 2020, by the last day of the loan’s covered period)

This Salary/Hourly Wage Reduction Safe Harbor from the SBA exempts borrowers from a reduction in their loan forgiveness amount that would otherwise be required as a result of certain reductions in an employee’s salary or hourly wage of more than 25%.

Note: borrowers with loans $50,000 and under do not need to incorporate FTE or salary/hourly wage reductions into their overall requested loan forgiveness amount, unless they - together with affiliates, if applicable - received First Draw PPP Loans of $2 million or more or Second Draw PPP Loans of $2 million or more.