Small business owners deserve all kinds of respect. Every day, we see our clients do whatever it takes to bring their vision to life. They juggle countless business functions and wear all the hats! And when the COVID pandemic hit, so many small businesses did what they always do: they found a way to pivot.

The government’s Payroll Protection Program (PPP) has been a true lifeline for businesses to keep moving forward, and it is crucial for small businesses to get the biggest loan forgiveness bang for these PPP bucks. That means using the funds according to the PPP loan forgiveness guidelines. Officeheads is helping small business owners navigate these guidelines through our Officeheads Academy DIY PPP Loan Forgiveness Program*, free weekly DIY PPP Loan Forgiveness webinars, and complimentary articles (like this one!). Since we’ve been getting lots of questions about proper use of PPP loan funding, here a quick summary:


Your PPP loan forgiveness is partially based on your company’s FTE employees, or full-time equivalent employees, who live in the United States. Calculate your FTE by dividing the actual number of hours paid during each pay period by the number of expected full-time hours, then round it to the nearest 10th. For example, if you pay an employee on a weekly schedule, full time is considered 40 hours:

  • If an employee works 40 hours, the FTE = 1 (40/40)
  • If an employee works 20 hours, the FTE = .5 (20/40)

After adding up all your FTEs during your covered period, compare that to the lesser of the average number of FTEs per month for one of the following test periods:

  • February 15–June 30, 2019
  • January 1–February 29, 2020
  • If you have seasonal employees, use the best consecutive 12-week period between May 1, 2019, and September 15, 2019


Payroll expenses must equal 60% of your PPP spending to maximize loan forgiveness with no more than 40% on non-payroll costs. (Note: The flexibility act reduced this from 75% / 25% on June 5, 2020.) Here’s what your funds can cover:

  • Cash compensation for W2 employees (salary, wages, commissions, tips, bonuses, paid leave)
  • Employer portion of group healthcare benefits (insurance premiums)
  • Employer contributions to retirement plans
  • Employer state and local payroll taxes

PPP funds can be used to cover payroll costs during your covered period with a cap of $100,000 annually per employee (i.e., $1,923 weekly, or $15,384 for an 8-week period of time). This excludes employer contributions for group health, retirement, and benefits.


PPP funds cannot be used for:

  • Employees living outside the United States
  • Employer match of federal payroll taxes (FICA and Medicare)
  • Independent contractors (they can apply for their own PPP)


No more than 40% of your PPP spending can go toward non-payroll costs that were in place by February 15, 2020. Eligible non-payroll expenses include:

  • Rent or lease payments
  • Interest on mortgages for business property
  • Utilities (what’s necessary to keep business operational)

Whether you have already received PPP funds, are waiting to hear about your application, or wonder if your business can still participate, Officeheads is here to help. Officeheads gives entrepreneurs and creatives the financial tools, processes, and team needed to boost each business to its greatest success. Reach out today to rev up your business with Officeheads!

Join the Officeheads DIY PPP Loan Forgiveness Program

Attend the DIY PPP Loan Forgiveness Webinar

The Officeheads Academy DIY PPP Loan Forgiveness program includes Officeheads’ interpretation of the rules of the Paycheck Protection Program (PPP). // The rules and guidelines are for the Paycheck Protection Program Loan Forgiveness Application SBA Form 3508 (06/20) and SBA Form3508EZ (06/20); we still expect further changes. // The information provided is for general informational purposes only. Officeheads’ interpretation does not account for all of the nuances in the requirements but is meant to provide simple tools to educate and put into action the rules and best practices for record-keeping, monitoring, and reporting. // Do not rely solely on the information provided in this tool. It is not intended to be advice: financial, accounting, tax, or other. Please consult appropriate advisors based upon your specific circumstances. // No Professional-Client Relationship is created between you and Officeheads by participating in this program.