The Small Business Administration’s (“SBA”) release of its official loan forgiveness application under the Paycheck Protection Program (“PPP,” Section 1102 of the CARES Act) answered a number of questions that borrowers and their legal and accounting advisers had regarding the program. But the application also leaves some questions unanswered, and borrowers, their lawyers, and their accountants are eagerly awaiting the release of promised loan forgiveness regulations that are expected to be posted online in coming days or weeks on Treasury’s website.

Borrowers should consult all existing regulations and guidance as they prepare to apply for PPP loans and as they prepare to apply for loan forgiveness. What follows is a high-level discussion of what we have observed in the latest guidance, but borrowers should be aware that the official federal guidance is changing weekly if not daily, and, depending on the complexity of a borrower’s application, consultation with a lawyer or accountant may be vital to ensuring compliance with the program. We also note that the original applications for PPP loans were revised after being initially provided and, while we have no reason to believe the loan forgiveness application will be revised at this point, the possibility certainly exists.

What We Know Now

Following disbursement of the PPP loan proceeds, each borrower has an eight-week period during which certain costs incurred or paid may be forgiven by the government. A number of practical questions about accounting for the how, when, and what surrounding payments during the 8-week forgiveness period have been cleared by