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SBA PPP Loan Forgiveness Guidelines

​Smaller hospitals with less than 500 employees in South Dakota had the ability to apply for and receive a loan from the Small Business Administration (SBA). On May 15 the SBA released a new Paycheck Protection Program (PPP) loan forgiveness application with accompanying instructions. The new application provides additional details on the loan forgiveness stage, with additional materials expected to be released on loan PPP loan forgiveness.

The loan forgiveness stage for borrowers is eight weeks which begins on the date of loan distribution. Some of the additional details provided on the loan forgiveness stage are highlighted below.

Eligible Payroll Costs

  • At least 75% of expenditures must be related to payroll in order to maximize loan forgiveness. Failing to meet the 75% threshold results in a reduction of the forgiveness amount.
  • Payroll costs incurred during the eight-week period but not paid by the end of the “covered” period are still eligible for forgiveness.
  • Borrowers can elect to track payroll using an alternative eight-week period, set to start on the first day of their first pay period following the PPP loan start date.


  • Bonuses paid to employees that return to work are eligible as a payroll expense as long as the total payroll for the employee does not exceed $100,000 annualized or $15,385 during the eight-week period.

Employer contributions

  • Employer contributions to health insurance and retirement plans must be paid during the eight-week period in order to be eligible as a payroll expense.
  • If the employer generally makes year-end retirement contributions, they will have to pay a pro-rated portion of the retirement plan during the covered period.

Nonpayroll Costs

  • Up to 25% of eligible costs for forgiveness can be unrelated to payroll.
  • These eligible costs include interest on mortgage obligations, utility payments and rent obligations.


  • The forgiveness amount can be reduced if the borrower does not maintain the average number of FTE employees during the eight-week period. Borrowers have until June 30 to return to FTE averages.

The borrower must submit documentation to its lender with their application, these documents include bank account statements, tax forms, receipts, average FTE counts and documentation of nonpayroll expenses.

Further details on PPP loan forgiveness guidelines can be found here.

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