The SBA released its PPP Loan Forgiveness Calculation Form Friday evening. Here is the link if you wish to review it.
View the SBA PPP Forgiveness Application
Here are step-by-step instructions for the loan forgiveness program. Some points should be made.
- The form is cumbersome! This will take some time to complete.
- The form yields no huge surprises as it substantially follows what was put forth in the Cares Act and subsequent Q&As under the SBA FAQs.
- At this writing, the Treasury/SBA is sticking to the eight-week period beginning on the date of the first disbursement of PPP funds to the recipient. This is important to note. In many cases, businesses were unable to be open or were operating under rules limiting the ability to utilize all employees. It was hoped the eight weeks would be extended to a time frame when the business was no longer limited under the various local governmental stipulations. The American Institute of CPAs is petitioning the Treasury on this matter. Additionally, there appears to be bipartisan support to extend the time past the eight-week period.
- There is an addition of the “alternative payroll covered period.” This allows the borrower to match up its payroll period beginning on their first payroll period after the disbursement of funds. For instance, if you pay your employees bi-weekly and the payroll period begins on the Sunday after the loan disbursement date you may elect to start your payroll calculations with that date.
- For those non-payroll costs to be included as eligible costs the costs do not need to be incurred and paid. If the cost is incurred during the eight-week period it can be included as an eligible cost if it is paid by the normal due date of the cost.
- The full-time equivalency was determined to be a forty-hour workweek. There is a simplified method that categorizes employees as either full-time (1.0) or part-time (0.5) for this purpose.
- The calculation of the loan forgiveness is not an all or nothing proposition. In other words, the eligible payroll costs less than 75% of the original loan does not negate the entire forgiveness but prorates the amount of the loan to be forgiven.
- There are safe harbors allowing you to hire employees back prior to June 30th to meet the FTE computations. Click here to read more about the PPP safe harbors
- As previously stated in an SBA FAQ, another safe harbor for FTEs is included if you have issued a written offer to rehire an employee and if they do not return to work, they can still be counted towards the FTE computations. The safe harbor is also addressed if an employee is terminated for cause.
The Wall Street Journal reported additional guidance/clarification will be coming shortly. This, and the possibility of added legislation on the rules, may give borrowers more flexibility. In the meantime, we suggest you begin reviewing the application and assembling the supporting records indicated in the application.
How DHJJ Can Help
If you need assistance navigating the PPP Loan Forgiveness Calculation Form, please reach out to your DHJJ CPA by filling out the form below or calling 630-420-1360.