Home Coronavirus Coverage Paycheck Protection Program Loan Forgiveness Update – Duane Morris

Paycheck Protection Program Loan Forgiveness Update – Duane Morris


Now that the Small Business Administration (SBA) has funded the first wave of Paycheck Protection Program (PPP) loans under the Coronavirus Aid, Relief and Economic Security Act (CARES Act), borrowers need to be mindful of the PPP use-of-proceeds requirements for forgiveness and the penalties for the unauthorized use of proceeds.

Loan Forgiveness for PPP Loans

Under the CARES Act, PPP loans may be forgiven in full, as long as a borrower uses all of the PPP loan proceeds in accordance with the conditions for forgiveness.

Permitted Use of PPP Loan Proceeds
Borrowers are required to use PPP loans only for:

  • Payroll costs[1];
  • Interest payments on debt obligations incurred before February 15, 2020 (note that only interest on mortgage obligations can be forgiven);
  • Rent payments on leases dated before February 15, 2020; and
  • Utility payments under service agreements dated before February 15, 2020.

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