PPP Forgiveness Application

The SBA has published its PPP Forgiveness Application (application) and with it, a little more information on how the loans can be forgiven. Here is the link to the SBA application https://www.sba.gov/document/sba-form–paycheck-protection-program-loan-forgiveness-application

Here is what we know, as of today. 

1. If you applied for the EIDL (Economic Injury Disaster Loan) advance and received it, you will have to report that amount on your application along with your EIDL application number. When applicable, the EIDL advance will be deducted from the forgiveness amount remitted to your lender.

2. The SBA gave us great news on the 8 week-period. If you have a biweekly or more frequent payroll cycle, the SBA will allow you to start the eight-week period beginning with your first payroll after you received the PPP disbursement.

3. If your loan is more than $2 million be prepared for a possible audit, the application has a box to check if your loan is in excess of $2 million.

4. The loan forgiveness will be reduced if the hourly/salary wages are reduced by more than 25%. You will also need to calculate your Full-Time Equivalency (FTE) to show that you have maintained the same number of employees. The SBA application is using 40 hours a week to calculate the FTE employees.

5. There is now a defined payroll reduction exemption for the following employees a) any position where a good-faith written offer to rehire was made during the covered period which was rejected by the employee b) any employee that was terminated for cause during the covered period c) any employee who voluntarily resigned

6. The SBA application says payroll costs are considered paid on the day that paychecks are distributed or the Borrower originates an ACH credit transaction. Payroll costs are considered incurred on the day that the employee’s pay is earned. Payroll costs incurred but not paid during the Borrower’s last pay period of the Covered Period are eligible for forgiveness if paid on or before the next regular payroll date. Otherwise, payroll costs must be paid during the Covered Period.

7. The maximum amount you can pay each individual employee during the covered period is $15,385 per employee. That is an annual salary of $100,000. This includes any owner-employee or self-employed individual or general partner.

8. There is good news on eligible nonpayroll costs, such as covered mortgage obligations, payment of interest, rent, and utility expenses still cannot exceed 25% of the total loan forgiveness amount. They must be paid during the Covered Period or incurred during the Covered Period and paid on or before the next regular billing date, even if the billing date is after the Covered Period. 

9. Keep your support for every payment, you will need to send this support to your lender.

10. Use this application as a guide. You will need to apply for the loan forgiveness through the lender who disbursed the funds to you. As we know, every lender seems to have their own process so it may look different than this application.

If you need assistance calculating your loan forgiveness please Click Here to set up a virtual meeting or a phone call.  

Have a great week!