These Frequently Asked Questions (FAQs) are for informational purposes only and is subject to change as further administrative guidance is released. WaFd Bank makes no representation or warranty as to whether any borrower will be eligible for forgiveness. Borrowers should contact their tax or legal advisors with specific questions about their eligibility for forgiveness.

This website will be added to as we receive new information. It was last updated on June 5th, 2020. 

Frequently Asked Questions


Payroll / Full-Time Equivalent (FTE)


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I took out a PPP loan. How much of my loan will be forgiven?

The loan amount to be forgiven will be based on your use of the loan proceeds over the “covered period” or “alternative payroll covered period” following the date of loan disbursement.
While those periods were originally only eight-weeks, the Borrower now has the option to use loan funds over a 24-week period.

A minimum of 60% of your total loan amount should go towards payroll costs. The remaining 40% should be used towards other forgivable purposes, such as rent, utilities, or mortgage interest.

What is the deadline for a Borrower applying for loan forgiveness?

Borrowers may apply for loan forgiveness following the end of their eight-week or 24-week period. Borrowers have up to 10 months from the end of the last day of their covered period in which to apply for loan forgiveness.

When will I know how much forgiveness I qualify for?

You should receive a response within 60 days of the submission of your completed application for loan forgiveness.

Is there any chance that the eight-week period will be extended?

Yes. Effective June 5, 2020, Borrowers have the option of extending their covered period to 24-weeks for using loan funds.

How do I calculate reduced Full-Time Equivalent (FTE) count on my Loan Forgiveness Application?

To calculate a reduced number of FTEs, Borrowers must:

  1. (1) [on line 11 of Sched. A] include the average FTE headcount from either:
    1. (a) February 15, 2019 through June 30, 2019; OR
    2. (b) January 1, 2020 through February 29, 2020; OR
    3. (c) [FOR SEASONAL EMPLOYERS] either (a) or (b) or a consecutive 12-week period between May 1, 2019 and September 15, 2019
  2. (2) [on line 12 of Sched. A] include the total average FTE headcount that is the sum of Box 2 and Box 5 on the Sched. A worksheet (lines 2 and 5 on the Schedule A)
  3. Divide Line 12 by Line 11 to receive the Line 13 “FTE Reduction Quotient”

May loan proceeds be used towards payroll costs paid during the eight-week period, or may they also be used for payroll costs incurred?

Borrowers are generally eligible for forgiveness for the payroll costs paid and payroll costs incurred during the eight-week or 24-week Covered Period (or Alternative Payroll Covered Period) (“payroll costs”). Payroll costs are considered paid on the day that paychecks are distributed or the Borrower originates an ACH credit transaction. Payroll costs are considered incurred on the day that the employee’s pay is earned. Payroll costs incurred but not paid during the Borrower’s last pay period of the Covered Period (or Alternative Payroll Covered Period) are eligible for forgiveness if paid on or before the next regular payroll date. Otherwise, payroll costs must be paid during the Covered Period (or Alternative Payroll Covered Period).

Are we required to immediately bring previously laid off employees back to the payroll? What do we do about employees who refuse to come back to work due to vulnerabilities?

Nothing in the CARES Act prevents a delay in bringing employees back to work, but it may impact the amount of loan forgiveness. The Loan Forgiveness Application calculates FTEs for loan forgiveness that cannot be delayed until the business is actively working again. Additionally, not filling open positions may limit an employer’s ability to reach the minimum 60% threshold for payroll costs, which can also reduce the forgivable loan amount. There is also nothing prohibiting employers from hiring additional employees in excess of the number used in calculating loan amount in the original loan application. Employers should fill any open positions as soon as possible to avoid a reduction in loan forgiveness. Employers may also continue paying employees who are not actively working, at a minimum of 75% of their regular salary or hourly wages in order to avoid a reduction.

Do I have to bring back the total number of employees or just pay 60% of the PPP Loan towards payroll regardless of the number of employees or hours?

The Loan Forgiveness Application looks at the average total number of FTEs over the eight-week period as well as total payroll costs. However, in certain circumstances, you can get FTE credit during the eight-week period for FTEs who are not actively working, so long as those employees still received at least 75% of their regular pay. See  PPP Schedule A Worksheet, Table 1 of the Loan Forgiveness Application.

Unfortunately, there are too many moving parts related to FTEs and reduction in salary or hourly rate to be able to provide a definitive answer. Remember that a minimum of 60% of loan amount must go towards payroll costs to avoid a reduction in loan forgiveness; however, reductions in forgiveness may apply for any reductions in FTE count or compensation.

I've heard there may be circumstances where a Borrower can fall under a Safe Harbor and not have loan forgiveness reduced if the number of FTEs is reduced. Can you discuss the Safe Harbor for FTE reductions?

Borrowers may qualify for the Safe Harbor from the FTE reduction in the following circumstances: If FTE headcount is lower from the period between 2/15/20-4/26/20 than it was during the Borrower's pay period including 2/15/20, the Borrower needs to restore the headcount to at least the 2/15/20 amount of FTEs by December 31, 2020.

Borrowers may also qualify for a Safe Harbor if they can document an inability to return to the same level of business activity as such business was operating at before February 15, 2020, due to compliance with requirements established or guidance issued 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 during the period beginning on March 1, 2020, and ending December 31, 2020, related to the maintenance of standards for sanitation, social distancing, or any other worker or customer safety requirement related to COVID–19.

Are bonuses and commissions included in payroll costs?

Yes. Payroll costs include salary, wages, commissions and similar compensation, capped at $15,385 per employee during the eight-week period. The Loan Forgiveness Application provides: Borrowers are generally eligible for forgiveness for the payroll costs paid and payroll costs incurred during the eight-week or 24-week Covered Period (or Alternative Payroll Covered Period). This indicates that bonuses or commissions paid during the Covered Period or the Alterative Payroll Covered Period generally qualify for forgiveness, but are included in determining whether the employee hit the $15,385 cap. Borrowers should consult with their accountant or payroll provider to determine if the bonus qualifies as payroll.

What are considered covered utility expenses?

The Loan Forgiveness Application states that covered utility payments are “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.”

Like all nonpayroll costs, forgivable utility payments “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.”

Does interest accrue during the forgiveness application period?

Yes. Interest begins accruing on the date the loan is disbursed. It appears that Borrowers will be responsible for repaying any accrued interest on loan amounts not forgiven.

What documentation do I need to include in my application for loan forgiveness?

Borrowers should refer to page 10 of the Loan Forgiveness Application for a detailed summary of required documentation that must be submitted to lenders. The summary itemizes required documentation for the following categories: Payroll, FTE, and Nonpayroll.

Additionally, page 10 includes a description of documents that borrowers must maintain but are not required to submit as part of their forgiveness applications. These documents must be maintained by Borrowers for a period of six years after the date the loan is forgiven or repaid in full, and borrowers must permit authorized representatives of SBA, including representatives of its Office of Inspector General, to access such files upon request.

What happens if not all of my loan is forgiven?

Any outstanding principal balance or interest that has accrued on the unforgiven loan amount must be repaid. Payments shall be due following a deferral period to be determined by the SBA (previously six months following loan disbursement). Interest shall accrue at a rate of 1% of the loan amount. The total remaining principal and interest must be repaid within five years of initial loan disbursement.

What if my payroll costs change during the eight-week period?

If your payroll costs change due to a reduced number of FTEs that do not qualify for a Safe Harbor or other exception, then your loan forgiveness amount will be reduced proportionately.

If your payroll costs change due to reduced salaries, your eligible amount of forgiveness will be reduced if your total payroll costs fall below 60% of the total loan amount. Note that if an employee did not work for the Borrower in 2019, or earns in excess of $100,000 but experienced a salary reduction, these salaries are not factored into the calculation.

How do I calculate my payroll costs if my loan funds are received in the middle of a pay period?

A Borrower’s “Covered Period” begins on the date PPP loan funds are disbursed by the lender. At this time, it does not appear that the covered period can be backdated to a period prior to receipt of loan funds. However, there is now an “Alternative Payroll Covered Period” for employers who use a “biweekly (or more frequent) payroll schedule”. The Alternative Payroll Covered Period allows Borrowers to start their eight-week or 24-week period “on the first day of their first pay period following their PPP Loan Disbursement Date.” The Loan Forgiveness Application Instructions give the following example for an alternative eight-week period:

If the Borrower received its PPP loan proceeds on Monday, April 20, and the first day of its first pay period following its PPP loan disbursement is Sunday, April 26, the first day of the Alternative Payroll Covered Period is April 26 and the last day of the Alternative Payroll Covered Period is Saturday, June 20.

See the Loan Forgiveness Application for additional details.

I have already laid off or reduced salaries for some employees before applying for this loan. Can I rehire or increase pay for those employees?

Yes! You can rehire any staff that were laid off or put on furlough and reinstate any pay that was decreased by more than 25% to meet the requirements for forgiveness before the end of your covered period.

I have extended offers to some of my employees who were laid off and now they are refusing to come back to work? Will my loan forgiveness be impacted as a result?

No, if you follow the SBA’s guidance. The SBA has confirmed that if an employer makes a “good faith, written offer of rehire” to their employees, and those employees refuse the offer to return to work, the Borrower will not be penalized and those employees will not be counted towards a reduction in headcount. The Borrower needs to provide documentation that they made an offer of rehire and that the employee has rejected the offer.  The Borrower must also inform the applicable state unemployment insurance office of the employee’s rejected offer of reemployment within 30 days of the employee’s rejection of the offer.

Can you provide any clarity about the eight-week period for FTE count vs. the June 30th week ending FTE count?

The June 30, 2020 date has now been extended to December 31, 2020. This date is used for determining whether a Borrower qualifies for a Safe Harbor from a reduction in loan forgiveness due to either a reduction in the average number of FTEs or a reduction in compensation during the covered period.

Are there any other exceptions to a reduction in loan forgiveness if the Borrower experiences an FTE Reduction?

Yes. FTEs whose positions are not filled by new employees are considered “exceptions” if they fall under one of the following situations:

  1. Any FTE positions for which the Borrower made a good-faith, written offer to rehire an employee during the Covered Period or Alternative Payroll Covered Period, which was rejected by the employee and is documented.The Borrower must also report the employee’s refusal to return to work to the applicable state unemployment insurance office.
  2. FTE was fired for cause.
  3. FTE voluntarily resigned.
  4. FTE voluntarily requested and received a reduction in their hours.

Borrowers should carefully document any of the above situations to qualify for an exception to a reduction in loan forgiveness.

I am self-employed and have a PPP loan. What amount of my loan is eligible for forgiveness?

The amount of loan forgiveness can be up to the full principal amount of the loan plus accrued interest. However, for self-employed applicants, forgiveness for owner compensation is limited to 8/52 of 2019 net profit and deductible mortgage, rent and utility expenses. The actual amount of loan forgiveness will depend, in part, on the total amount spent over the covered period on:

  • Payroll costs including salary, wages, and tips, up to $100,000 of annualized pay per employee (for eight weeks, a maximum of $15,385 per individual), as well as covered benefits for employees (but not owners), including health care expenses, retirement contributions, and state taxes imposed on employee payroll paid by the employer (such as unemployment insurance premiums);
  • Owner compensation replacement, calculated based on 2019 net profit, with forgiveness of such amounts limited to eight weeks’ worth (8/52) of 2019 net profit, but excluding any qualified sick leave equivalent amount for which a credit is claimed under section 7002 of the Families First Coronavirus Response Act (FFCRA) (Public Law 116-127) or qualified family leave equivalent amount for which a credit is claimed under section 7004 of FFCRA;
  • Payments of interest on mortgage obligations on real or personal property incurred before February 15, 2020, to the extent they are deductible on Form 1040 Schedule C (business mortgage payments);
  • Rent payments on lease agreements in force before February 15, 2020, to the extent they are deductible on Form 1040 Schedule C (business rent payments); and
  • Utility payments under service agreements dated before February 15, 2020 to the extent they are deductible on Form 1040 Schedule C (business utility payments).

Do lease payments include payment for personal property such as business vehicles, as well as real property?

Yes. Pursuant to the Loan Forgiveness Application, covered rent obligations include “business rent or lease payments pursuant to lease agreements for real or personal property in force before February 15, 2020.”

Accordingly, lease payments for business vehicles generally should qualify, provided that the lease was in force before February 15, 2020.

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