SBA Paycheck Protection Program (PPP) Loan
Forgiveness: In Brief
The Coronavirus Aid, Relief, and Economic Security Act (CARES Act; P.L. 116-136) created
the Small Business Administration (SBA) Paycheck Protection Program (PPP) to provide short-
term, low-interest loans that could be forgiven under specified circumstances to certain small
business and nonprofits. For more information on Coronavirus Disease 2019-related (COVID-19-
related) assistance to small businesses, including a summary of enacted legislation and select
bills, see CRS Report R46284, COVID-19 Relief Assistance to Small Businesses: Issues and
Policy Options, by Robert Jay Dilger and Bruce R. Lindsay.
Congress initially authorized $349 billion for SBA 7(a) loans, including PPP loans, which were available through June 30,
2020. Lending began on April 3, 2020, and the initial authorization was exhausted by April 16. On April 24, 2020, Congress
authorized another $310 billion ($659 billion total) for 7(a) loans—including PPP loans—in the Paycheck Protection
Program and Health Care Enhancement Act (P.L. 116-139). Lending resumed on April 27, 2020, and stopped, once again, on
June 30, 2020, as required by the CARES Act. Lending resumed on July 6, 2020, following enactment of An Act to Extend
the Authority for Commitments for the Paycheck Protection Program (P.L. 116-147).
The act extended the authorization for issuing new PPP loans from June 30, 2020, to August 8, 2020; it authorized $659
billion for PPP loan commitments and $30 billion for 7(a) loan commitments. The SBA stopped accepting new PPP loan
applications on August 8, 2020. As of that date, the SBA had approved over 5.2 million PPP loans, totaling more than $525
billion.
P.L. 116-260, the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (Division N, Title III of the
Consolidated Appropriations Act of 2021), among other provisions, extended the PPP through March 31, 2021, increased the
program’s authorization amount from $659 billion to $806.45 billion, and authorized second-draw PPP loans of up to $2
million. P.L. 117-2, the American Rescue Plan Act of 2021, among other provisions, increased the PPP authorization amount
to $813.7 billion. P.L. 117-6, the PPP Extension Act of 2021, extended the acceptance of PPP applications through May 31,
2021, and authorized the SBA to process any pending applications submitted on or before that date through June 30, 2021.
As required by law, the SBA stopped accepting new PPP applications on May 31, 2021, and it had approved over 11.8
million PPP loans, totaling nearly $800 billion.
Initially, PPP loans used for payroll expenses and for specified nonpayroll operating costs paid or incurred during an eight-
week “covered period” following the loan’s origination date could be fully forgiven if the borrower met certain payroll and
employment retention criteria. Borrowers were required by SBA regulations to use at least 75% of the loan forgiveness
amount on payroll costs and the remainder on eligible mortgage interest, rent, and utility payments in order to receive full
loan forgiveness. The 75% payroll requirement was reduced to 60% by the Paycheck Protection Program Flexibility Act
(P.L. 116-142). The act also extended the PPP loan forgiveness covered period from 8 weeks after the loan’s origination date
to the earlier of 24 weeks after the loan’s origination date or December 31, 2020. The act also provides borrowers that
received a PPP loan prior to the date of enactment (June 5, 2020) the option to use the CARES Act’s loan forgiveness
covered period of eight weeks after the loan’s origination date.
This In Brief report discusses statutes, regulations, and agency guidance relevant to the PPP loan forgiveness process and
determination. A summary of the Paycheck Protection Program Flexibility Act is also provided.