Frequently Asked Questions About PPP Loan Forgiveness

Frequently Asked Question Web

What is an Allowable Expense, and How Does the New FTE Calculation Come into Play?

Navigating loan forgiveness for Paycheck Protection Program funds is becoming a complex and confusing process. Borrowers weren’t given much guidance when loans were disbursed except general allowances for payroll and non-payroll expenses. And since forgiveness is handled by individual lenders, documentation requirements can vary.

On June 3, 2020, Adams Brown Senior Managers Austin Coyan, CPA, CFE and James Bailey, CPA hosted a webinar to help small business owners and managers interpret loan forgiveness guidance. Even though they were working with proposed guidelines at the time, the PPP Flexibility Act was made law just two days later without significant changes from its draft form.

During the webinar, Austin and James received more than 120 questions ranging from records retention to allowable costs. These FAQs represent the most commonly asked questions about loan forgiveness. If you don’t see what you’re looking for here, reach out to James, Austin, or your Adams Brown representative anytime for additional guidance.


  • A: PPP loans can be audited for up to six years after the loan is paid off or when loan forgiveness is granted, whichever is later. For example, if the full amount of PPP funds is forgiven, the audit timeframe is six years from the point that the lender issues the loan forgiveness letter. If any amount of PPP funds is converted into a two-year (or five-year) loan, then the record retention period is six years from the point that the entire loan is paid off.

  • A: Talk to an attorney. This hasn’t been covered in any existing guidance yet, but the thinking is that whoever owns the entity, owns the liability. However, in the case of a stock sale, liability could be shifted. But again, there’s nothing concrete about this yet. 

Payroll Expenses


PPP Forgivable Expenses

Adams Brown is working with more than 160 clients on loan forgiveness packages. We work with them to ensure documentation is in order, help track expenses, take care of the forgiveness application, and talk to the lender about any special circumstances. If you’re interested in learning more about package pricing, let us know.