Changes to the PPP Application for Loan Forgiveness

Over the past weekend the Small Business Administration (SBA) released its application for loan forgiveness under the Payroll Protection Program. Click here to view the Loan Forgiveness Application Instructions for Borrowers.

While the application clarifies certain questions and concerns, there are still many uncertainties. Highlights of the changes to the SBA application are listed below:

Eligible Payroll Costs

  • Borrowers can elect an “Alternative Payroll Covered Period” to calculate payroll and payroll related costs. For convenience, this option is available to borrowers that pay bi-weekly, or more frequently. In summary, under this method, the 8 week period for payroll related costs begins on the 1st pay period falling after the PPP loan receipt date.
  • The Alternative Payroll Covered Period does not apply to non-payroll costs such as rent, utilities and mortgage interest. These would still follow the covered period 8 weeks from the loan receipt date.
  • No guidance on increasing employees compensation for bonuses, hero pay, etc. if it will be capped at $1,923 a week.

Eligible Non-Payroll Costs

  • Eligible costs must be paid or incurred during the 8 week period. Costs are considered incurred if they are paid before the next regular billing date, even if the billing date is after the covered period.

Average Full Time Equivalent (FTE) has Two Options for Calculation

  • For each employee, calculate the average total hours paid per week, divide by 40, and round to the nearest tenth, or
  • The simplified method assigns a 1.0 FTE for each employee who works 40 hours or more, and a .5 FTE for each employee who works less than 40 hours

Eligible Owner Compensation

  • Owner-employees, self-employed individuals, and general partners are separately reported and will be limited to the lesser of $15,385 (8-week equivalent of $100,000), or the 8-week equivalent of the applicable compensation for 2019.
  • No guidance on increasing spouses (or other related party) compensation.

FTE Reduction Exception

  • For employees who rejected an offer to be rehired during the 8-week period, make sure you maintain written documentation of the offer and rejection.

Please note this is based on the information that is currently available and is subject to change. Contact your Nisivoccia representative if you have any questions, or visit our COVID-19 Resource Center.

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