Last week, the Small Business Administration released guidance for the Paycheck Protection Program (PPP) loan forgiveness in the form of the Loan Forgiveness Application. You can find the loan forgiveness application here.

The following is an abridged overview of the new guidelines. For a full reading of the interpretation click here.

Covered Period:  This has not changed.  

The first day of the Covered Period must be the same as the PPP Loan Disbursement Date. 

Alternative Payroll Covered Period: This has been added. 

Borrowers with a biweekly (or more frequent) payroll schedule may elect to calculate eligible payroll costs using the eight-week (56-day) period that begins on the first day of their first pay period following their PPP Loan Disbursement Date (the “Alternative Payroll Covered Period”). 

Eligible Payroll Costs: This has been clarified.

Borrowers are generally eligible for forgiveness for the payroll costs paid and payroll costs incurred during the eight-week (56-day) Covered Period (or Alternative Payroll Covered Period) (“payroll costs”). Payroll costs are considered paid on the day that paychecks are distributed or the Borrower originates an ACH credit transaction. 

Eligible Non-payroll Cost: These have also been clarified.

Non-payroll costs eligible for forgiveness consist of covered mortgage obligations: payments of interest on any business mortgage obligation on real or personal property incurred before February 15, 2020; covered rent obligations: business rent or lease payments pursuant to lease agreements for real or personal property in force before February 15, 2020; and covered utility payments.

Eligible Payroll Costs Limitations for Owners: This has been clarified.

This amount is capped at $15,385 (the eight-week equivalent of $100,000 per year) for each individual or the eight-week equivalent of their applicable compensation in 2019, whichever is lower.  

Salary/Hourly Wage Reduction: This calculation has been changed.

It reflects averages of the periods and is compared to the first quarter of 2020, rather than comparing 8 weeks to the last full quarter worked.

Average FTE: This calculation has been defined:

This calculates the average full-time equivalency (FTE) during the Covered Period or the Alternative Payroll Covered Period.  

Required Certification: Many loan applicants became concerned after applying that the SBA might deem their loan unnecessary, potentially incurring penalties and needing to return the loan. A safe-harbor has been issued stating that if your business requested less than $2,000,000 of PPP funds, the applicant will be assumed to have performed the required certification concerning the necessity of their loan requests in good faith.

To apply for PPP loan forgiveness, you must complete the loan forgiveness application and submit with supporting documentation to your lender. If you need any assistance in completing the application, please contact us. We are here to help.

The Partners and Staff at Mathieson, Moyski, Austin & Co., LLP