Frequently Asked Questions


Eligible Expenses (Payroll and Nonpayroll)

To qualify for loan forgiveness, the funds must be used for eligible costs incurred or paid during a 24-week (168 day) covered period (ending December 31, 2020, at the latest); if you received your loan before June 5, 2020, then you can choose an 8-week (56 day) or 24-week (168 day) covered period. Costs include:

  • Eligible payroll costs, including compensation to owners and employee benefits
  • Interest payments on business mortgage obligations on real or personal property, where the mortgage originated before February 15, 2020, (but not any payment of principal or prepayment of interest)
  • Business rent or lease payments for real or personal property, where the rent or lease agreement was in force before February 15, 2020
  • Business utility payments for a service such as electricity, gas, water, transportation, telephone, or internet access for which service began before February 15, 2020

At least 60% of your total forgivable amount must be used for allowable payroll costs, and maximum of 40% can be used for allowable nonpayroll costs.



To qualify for loan forgiveness, the funds must be used for eligible costs incurred or paid during a 24-week (168 day) covered period (ending December 31, 2020, at the latest); if you received your loan before June 5, 2020, then you can choose an 8-week (56 day) or 24-week (168 day) covered period.

You can seek forgiveness for payroll costs for the covered period based on either the following, at your election:

  • Covered period: The period that begins on the date you received the PPP loan or proceeds; or
  • Alternative payroll covered period: If you have biweekly or more frequent payroll schedule, the period that begins on the first day of the first pay period after you receive the PPP loan proceeds

Payroll costs for the covered period must be paid or incurred during the period to be eligible. If payroll costs are incurred during the last pay period within the covered period selected, but paid after the end of the covered period selected (but on or before the next regular payroll date), these payroll costs will still be eligible for forgiveness. (For example, this may happen when your pay cycle ended on the payday of Friday, October 2, but the covered period selected ended on October 1).



Eligible payroll costs include the following if paid or incurred during the covered period of the alternative payroll covered period :

  • Gross salary, gross wages, gross tips, gross commissions, paid leave (vacation, family, medical or sick leave, not including leave covered by the Families First Coronavirus Response Act), and allowances for dismissal or separation
  • Payments for employer contributions for employee health insurance, including employer contributions to self-insured, employer-sponsored group health plan, but excluding any pre-tax contributions by employees
  • Payments for employer contributions to employee retirement plans, excluding any pre-tax or after-tax contributions by employees
  • Payments for employer state and local taxes assessed on employee compensation (such as state unemployment insurance tax), excluding any taxes withheld from employee earnings

Payroll costs may include bonus and hazard pay, and may include salaries paid to furloughed employees.

Limitation: For each individual employee, the total amount of cash compensation eligible for forgiveness may not exceed a pro-rated annual salary of $100,000.

This means the most you can claim for cash compensation is $46,153 for any individual employee during the 24-week covered period selected (or $15,385 if you select the 8-week period).

Payroll costs must be for employees whose principal place of residence is in the United States. Payments to independent contractors are also not eligible.

Owner-employees and self-employed individuals are eligible for loan forgiveness on the basis of their compensation. For self-employed individuals filing 1040 Schedule C, you are capped based on 2019 net profit. For general partners, you are capped by the amount of your 2019 net earnings from self-employment (reduced by certain adjustments) multiplied by 0.9235.

For borrowers with a 24-week covered period, the maximum amount of loan forgiveness you can claim is compensation per individual owner or partner is the lower of 2.5 months of compensation earned in 2019 $20,833, which is the 2.5-month equivalent of $100,000 per year. If you elect an 8-week covered period, the maximum is set at $15385, which is the 8-week equivalent of $100,000.



Yes, you must exclude the following:

  • Compensation to an employee whose principal place of residence is outside of the United States
  • Compensation to an independent contractor (1099) Independent contractors do not count as employees for PPP
  • Qualified sick and family leave wages for which a credit is allowed under sections 7001 and 7003 of the Families First Coronavirus Response Act (FFCRA) (Public Law 115-127)

Also, the compensation of any individual employee is capped at an annual salary of $100,000.

For borrowers with a 24-week covered period, the maximum amount of loan forgiveness you can claim as compensation per individual owner or partner is the lower of 2.5 months of compensation earned in 2019 or $20,833, which is the 2.5-month equivalent of $100,000 per year. If you elect an 8-week covered period, the maximum is set at $15,385, which is the 8-week equivalent of $100,000.

Remember, in order to be eligible for 100% loan forgiveness, at least 60% of the PPP loan must be used for eligible payroll costs.



Owner-employees and self-employed individuals are eligible for loan forgiveness on the basis of their compensation. For self-employed individuals filing 1040 Schedule C, you are capped based on 2019 net profit. For general partners, you are capped by the amount of your 2019 net earnings from self-employment (reduced by certain adjustments) multiplied by 0.9235.

For borrowers with a 24-week covered period, the maximum amount of loan forgiveness you can claim is compensation per individual owner or partner is the lower of 2.5 months of compensation earned in 2019 $20,833, which is the 2.5-month equivalent of $100,000 per year. If you elect an 8-week covered period, the maximum is set at $15385, which is the 8-week equivalent of $100,000.



Eligible nonpayroll costs include:

  • Interest payments on business mortgage obligations on real or personal property, where the mortgage originated before February 15, 2020, (but not any payment of principal or prepayment of interest)
  • Business rent or lease payments for real or personal property, where the rent or lease agreement was in force before February 15, 2020
  • Business utility payments for a service such as electricity, gas, water, transportation, telephone, or internet access for which service began before February 15, 2020

To be eligible, nonpayroll costs must be paid during the covered period, or incurred during the covered period and paid on or before the next regular billing date, even if the billing date is after the covered period. (For nonpayroll costs, you must use the covered period and not the alternative covered period.)

For Covered mortgage obligations, prepayments of interest and principal payments are not eligible for forgiveness.



Potential reductions in loan forgiveness and details on Safe Harbor

Forgiveness is based in part on maintaining employees and maintaining wages paid, or rehiring and reinstating employee wage levels, if previously reduced. To maximize forgiveness, you may choose to rehire and restore wages sooner to increase eligible payroll costs that fall into the covered period.

If you had a reduction in full-time equivalency (FTE) or wage level, your forgiveness amount may be reduced. You may be exempt from these reductions if you restored FTE and wages levels no later than December 31, 2020. These two types of reductions and exemptions, including Safe Harbors are explained in the Safe Harbor FAQ.

You may also be exempt from these reductions if you can document that you are not able to rehire employees or hire replacement employees for unfilled positions or cannot return to normal business activities because of COVID related safety requirements.



Loan forgiveness may be reduced if the number of average weekly FTE employees during the covered period (or the alternative payroll covered period) was less than during the FTE reduction reference period selected.

You can select a reference period of either:

  • February 15, 2019 to June 30, 2019; or
  • January 1, 2020 to February 29, 2020; or
  • For seasonal employers, either of the preceding periods of a consecutive 12-week period between May1, 2019 and September 15, 2019

The borrower is exempt from such a reduction if the FTE Reduction Safe Harbor Applies. Safe Harbors are explained in the Safe Harbor FAQ.

You may be exempt from these reductions if you restored FTE no later than December 31, 2020.

You may also be exempt from these reductions if you can document that you are not able to rehire employees or hire replacement employees for unfilled positions or cannot return to normal business activities because of COVID related safety requirements.



Full-time equivalency (FTE) employee generally means and employee who works 40 hours or more, on average, each week. For part-employees who work less than 40 hours, calculate their FTE as a proportion of 40 hours. For example, if an employee worked 32 hours per week on average, the employee should be counted as 0.8 FTE. Alternatively, SBA offers a simplified method that assigns all part-time employee as 0.5, if that is preferable.

Only employees whose place of residence is in the United States should be included.

When Counting FTE reductions, you will not be penalized for:

  • A position for which you made a good-faith, written offer to rehire an employee during the covered period selected and the offer was rejected - subject to certain requirements
  • An employee who was fired for cause, voluntarily resigned, or voluntarily requested a reduction of their hours, during the covered period selected
  • A documented inability to rehire particular employees or hire replacement employees for unfilled positions
  • A documented inability to return to normal business activities because of COVID related safety requirements

In these cases, loan forgiveness will not be reduced.



In general, your loan forgiveness is reduced by the same percentage as the percentage reduction in FTE employees. This is calculated by comparing the average weekly FTE employees during the covered period (or the alternative payroll covered period) with the FTE reduction reference period selected.

For example, if you had 10.0 FTE employees during the FTE reduction reference period and this declined to 8.0 FTE employees during the covered period, the percentage of FTE employees declined by 20%, and therefore only 80% of otherwise eligible expenses will be forgiven.

You are exempt from such a reduction if the FTE Reduction Safe Harbor applies. Safe Harbors are explained in the Safe Harbor FAQ.

You may be exempt from these reductions if you restored FTE no later than December 31, 2020. These types of reductions and exemptions, including Safe Harbors are explained in the Safe harbor FAQ.

You may also be exempt from these reductions if you can document that you are not able to rehire employees or hire replacement employees for unfilled positions or cannot return to normal business activities because of COVID relate safety requirements.



The Safe Harbor exempts or protects you from the reductions in loan forgiveness due to decrease in FTE employee levels. You are exempt from the reduction in loan forgiveness if both the following conditions are met:

  • You reduced FTE employee levels between February 15, 2020, and ending April 26, 2020; and
  • You then restored FTE employee levels by no later than December 31, 2020

You may also be exempt from these reductions if you can document that you are not able to rehire employees or hire replacement employees for unfilled positions or cannot return to normal business activities because of COVID related safety requirements.



No. If you offered to rehire or offered to restore the employee's hours at the same salary or wages, you will not have an FTE reduction for that employee.

In calculating your PPP Loan forgiveness amount, you may exclude any reduction in FTE employee headcount attributable to a particular employee if:

  • You made a good faith, written offer to rehire or restore hours (as applicable) during the covered period or alternative payroll covered period;
  • The offer was for the same salary or wages and the same number of hours;
  • The offer was rejected;
  • You maintain records documenting the offer and rejections: and
  • You inform the state unemployment insurance office of the rejected offer within 30 days

You may also be exempt from these reductions if you can document that you are not able to rehire employees or hire replacement employees for unfilled positions or cannot return to normal business activities because of COVID related safety requirements.



If an employee was fired for cause, voluntarily resigned, or voluntarily requested a reduction of hours, you may count that employee at the same FTE level as before.



Loan forgiveness may be reduced when there was a reduction in an employee's salary or wages from January 1, 2020 to March 31, 2020, (the salary reduction reference period) in excess of 25%, unless an exception applies. There is a Salary/Hourly wage Reduction Safe harbor if you restored salary/wage levels by December 31, 2020.

For each Person Employed during the covered period selected, start with the employee's average annual salary or hourly wage during the covered period selected, and calculate whether that employee had a reduction in excess of 25% compared to the salary reduction reference period. Do not count the salary reduction for employees who were already counted in the RTE reduction.
This salary reduction penalty does not apply for any employee who was paid more than an annualized equivalent of $100,000 in any pay period in 2019.

In summary, if the average annual salary or hourly wage for each employee working during the covered period selected was at least 75% of their average annual salary or hourly wage in the salary reduction reference period, there is no salary/hourly wage reduction.



No. If certain employee salaries and wages were reduced between February 15, 2020 and April 26, 2020 (the Safe Harbor period), but those reductions were eliminated by December 31, 2020, you are exempt from any reduction in loan forgiveness due to those reductions in salaries and wages.



On the PPP forgiveness application, an authorized representative of the borrower must certify to all of the following:

  • The dollar amount for which forgiveness is requested was used for eligible expenses;
  • Understanding the consequences of knowingly using funds for unauthorized purposes;
  • Payments for eligible costs for which forgiveness is being requested have been verified;
  • The recommended supporting documents have been submitted;
  • The information provided in the application and supporting documentation is true and correct in all material respects;
  • Tax documents submitted are consistent with those that have been or will be submitted to the IRS; and
  • Failure to provide additional information requested by the SBA may result in a determination of loan ineligibility or denial of forgiveness.

For a full description of the certifications, please refer to the form 3508 or Form 3508EZ found on the SBA site.



Preparing for the PPP loan forgiveness application process

Within the covered period

To be eligible for forgiveness, you need to use the loan proceeds on the eligible costs within the 8-week or 24- covered period (ending December 31, 2020, at the latest).

Safe Harbor

The safe harbor FTE provision gives you until the end of the year to restore employee headcount and wages to February 15, 2020 levels in order to avoid FTE penalties during the forgiveness process. Safe Harbors are explained in the Safe Harbor FAQ.

If you received a PPP loan through Citizens National Bank, please do not attempt to submit the application downloaded from the SBA site. All forgiveness applications for must be submitted at Citizens National Bank.

Although you can apply for forgiveness at any time, to maximize PPP loan forgiveness, you'll want to make sure you have utilized the funds for eligible costs within the covered period. You'll need to calculate salary reduction conditions for the entire covered period, and should be ready to provide documentation for all your eligible expenses when you complete your application.

Be prepared to provide documentation for all your eligible expenses when you complete your application.

You have time ─ there is no immediate need to apply for PPP loan forgiveness, you have until the maturity date of your loan to submit an application. However, if you submit your loan forgiveness application within 10 months of the end of the covered period, you will not have to make any payments of principal or interest on your loan before the date on which the SBA makes a final decision on the loan forgiveness amount.

We will continue to keep you updated on key dates by email and on this site, as you continue through the forgiveness process.



There are two PPP loan forgiveness applications, the regular Form 3508, or the new form 3508EZ.

You can use the Form 3508EZ if you meet one of the following conditions:

Condition 1

The Borrower is a self-employed individual, independent contractor, or sole proprietor who had no employees at the time of the PPP loan application and did not include any employee salaries in the computation of average monthly payroll in the Borrower Application Form (SBA Form 2483).

Or

Condition 2

The Borrower did not reduce annual salary or hourly wages of any employee by more than 25 percent during the Covered Period or the Alternative Payroll Covered Period (as defined below) compared to the period between January 1, 2020 and March 31, 2020, (for purposes of this statement, "employees" means only those employees that did not receive, during any single period during 2019, wages or salary at an annualized rate of pay in an amount more than $100,000);

AND

The Borrower did not reduce the number of employees or the average paid hours of employees between January 1, 2020, and the end of the Covered Period. (Ignore reductions that arose from an inability to rehire individuals who were employees on February 15, 2020 if the Borrower was unable to hire similarly qualified employees for unfilled positions on or before December 31, 2020. Also ignore reductions in an employee's hours that the Borrower offered to restore and the employee refused.) See 85 FR 33004, 33007 (June 1, 2020) for more details.

Condition 3

The Borrower did not reduce annual salary or hourly wages of any employee by more than 25 percent during the Covered Period of the Alternative payroll Covered Period (as defined below) compared to the period between January 1, 2020 and March 31, 2020, (for purposes of this statement, "employees" means only those employees that did not receive, during any single period during 2019, wages or salary at an annualized rate of pay in an amount more than $100,000);

AND

The Borrower was unable to operate during the Covered Period at the same level of business activity as before February 15, 2020, due to compliance with requirements established or guidance issued between March 1, 2020 and December 31, 2020, by the Secretary of Health and Human Services, the Director of the Centers for Disease Control and Prevention, or the Occupational Safety and Health Administration, related to the maintenance of standards of sanitation, social distancing, or any other work or customer safety requirement related to COVID-19.

If you do not meet one of these conditions, you should use the regular loan forgiveness application, Form 3508.

For further guidance, please refer to the SBA site.

If your PPP loan is through Citizens National Bank, please do not attempt to submit a loan forgiveness application downloaded from the SBA site. All forgiveness applications for Citizens National Bank PPP Loans must be submitted through Citizens National Bank.



To help you prepare for the PPP loan forgiveness application, you may want to review the recommended supporting documents. You can also view the latest version of the PPP loan forgiveness applications, Form 3508 and Form 3508EZ on the SBA site.

If your PPP loan is through Citizens National bank, please do not attempt to submit a PPP loan forgiveness application downloaded from the SBA site. All forgiveness applications for Citizens National Bank PPP loans must be submitted through Citizens National Bank.

Some of the information, including your Citizens National Bank and SBA loan numbers, will be automatically pre-filled in your application.

There are slightly different documentation requirements between the Regular 3508 Form and 3508EZ.

Regular Form 3508:

The PPP loan forgiveness application includes the PPP loan forgiveness calculation form and Schedule A, which you will need to complete. You'll also be required to submit documentation, including:

Payroll documentation verifying eligible payments, consisting of the following:

  • Bank account statements or third-party payroll service provider reports
  • Tax forms including IRS Payroll tax filings (typically Form 941) and state quarterly business and individual wage reporting and unemployment insurance tax filings
  • Payment receipts, cancelled checks, or account statements documenting employer benefits contributions

FTE Documentation showing the number of FTE employees for the FTE reduction reference period selected.

Nonpayroll documentation verifying the existence of obligations/services prior to February 15, 2020, and eligible payments, consisting of the following:

  • Business mortgage interest payments: account statements or amortization schedules and receipts or cancelled checks
  • Business rent or lease payments: account statements or current lease and receipts or cancelled checks
  • Business utility payments: account statements or invoices and receipts or cancelled checks

While the bank may have some of these documents on file, the SBA requires you, as the borrower, to supply the documents to validate your expenses.

Form 3508EZ:

The Documents required with the 3508EZ are the same as listed above except for the following differences:

  • Form 3508EZ does not have a Schedule A
  • The FTE report is not required


You can view the latest version of the PPP loan forgiveness application on the SBA site. This form will guide you through the information and documentation required for loan forgiveness and will help you estimate your loan forgiveness amount.

If your PPP loan is through Citizens National bank, please do not attempt to submit a PPP loan forgiveness application downloaded from the SBA site. All forgiveness applications for Citizens National Bank PPP loans must be submitted through Citizens National Bank.

You have time ─ there is no immediate need to apply for PPP loan forgiveness, you have until the maturity date of your loan to submit an application. However, if you submit your loan forgiveness application within 10 months of the end of the covered period, you will not have to make any payments of principal or interest on your loan before the date on which the SBA makes a final decision on the loan forgiveness amount.

We will continue to keep you updated on key dates by email and on this site, as you continue through the forgiveness process.



Applying for PPP loan forgiveness

No, PPP loan forgiveness is not automatic. You will need to apply for forgiveness through the lender who issued your PPP loan.

You have time ─ there is no immediate need to apply for PPP loan forgiveness, you have until the maturity date of your loan to submit an application. However, if you submit your loan forgiveness application within 10 months of the end of the covered period, you will not have to make any payments of principal or interest on your loan before the date on which the SBA makes a final decision on the loan forgiveness amount.

We will continue to keep you updated on key dates by email and on this site, as you continue through the forgiveness process.

If your PPP loan is through Citizens National Bank, please do not attempt to submit a loan forgiveness application downloaded from the SBA site. All forgiveness applications for Citizens National Bank PPP Loans must be submitted through Citizens National Bank.

Be prepared to provide documentation for all your eligible expenses when you complete your application.



You must apply for PPP loan forgiveness through your PPP lender.

You have time ─ there is no immediate need to apply for PPP loan forgiveness, you have until the maturity date of your loan to submit an application. However, if you submit your loan forgiveness application within 10 months of the end of the covered period, you will not have to make any payments of principal or interest on your loan before the date on which the SBA makes a final decision on the loan forgiveness amount.

We will continue to keep you updated on key dates by email and on this site, as you continue through the forgiveness process.

If your PPP loan is through Citizens National Bank, please do not attempt to submit a loan forgiveness application downloaded from the SBA site. All forgiveness applications for Citizens National Bank PPP Loans must be submitted through Citizens National Bank.

We will soon provide additional details on the information and documents required for loan forgiveness and to help guide you through the process. Some of the information, including your Citizens National Bank and SBA loan number, will be pre-filled within your online application. Be prepared to provide documentation for all your eligible expenses when you complete your application.

You can view the latest version of the PPP loan forgiveness application, including on the SBA site.



If you received a PPP loan through Citizens National Bank, your loan numbers will be automatically pre-filled for you in the application. You will not need to have them ahead of time to be able to apply for forgiveness.

If your PPP loan is through Citizens national Bank, please do not attempt to submit a PPP loan forgiveness application downloaded from the SBA site. All forgiveness applications for Citizens National Bank PPP loans must be submitted through Citizens National Bank.

You have time ─ there is no immediate need to apply for PPP loan forgiveness, you have until the maturity date of your loan to submit an application. We will continue to keep you updated on key dates on this site, as well as by email and U.S. mail, as you continue through the forgiveness process.

We will continue to keep you updated on key dates by email on this site, as you continue through the forgiveness process.



PPP loan forgiveness will be based on your ability to meet the eligibility requirements for loan forgiveness, which include, but are not limited to:

  • Using the funds for allowable expenses (e.g. payroll, mortgage interest, rent and lease payments, utilities) during the 8-week or 24-week covered period.
  • Submitting a completed PPP loan forgiveness application, including all the recommended supporting documents before your maturity date.
  • The lender/SBA review. The lender has 60 days from receiving a completed PPP loan forgiveness application to issue a decision to the SBA. The lender must notify the borrower in writing if the lender has issued a decision denying the loan forgiveness application. Within 30 days of that notice, the borrower may request an SBA review of the lender decision.


The amount of loan forgiveness may be up to 100% of the principal amount of your PPP loan plus accrued interest, if the funds were used for eligible expenses.



Once you submit your PPP loan forgiveness application, it will be reviewed, and you will be notified of the decision. You will also be notified of the amount that is being forgive, any outstanding balance and a due date for your first payment, if applicable.

The lender has 60 days from receiving a completed PPP loan forgiveness application to issue a decision to the SBA. The lender must notify the borrower in writing if the lender has issued a decision denying the loan forgiveness application. Within 30 days of that notice, the borrower may request an SBA review of the lender decision.



If you submit your loan forgiveness application within 10 months after the end of the covered period, you will not have to make any payments of principal or interest on your loan before the date on which the SBA makes a final decision on the loan forgiveness amount.