A reduction to the loan forgiveness will be made if the average number of full-time employee equivalents (FTEs) per month during the eight-week period is less than the average number of employees per month during the look-back period (which can be to , at the borrowers discretion). The average number of FTEs per month is calculated based on the average number of FTEs for each pay period falling within a month.
The reduction in loan forgiveness for reduction in headcount can be avoided if the reduction in FTEs that was made during the period between is restored by . Keep an eye out for further guidance on this issue from the SBA.
The amount of the loan forgiveness will be reduced based on the following calculations:
There will be a reduction to the loan forgiveness amount for each employee – who earned annualized wages during 2019 of less than $100,000 (or $8, per month) by the percentage reduction in annualized wages of more than 25% as compared to their most recent full quarter (i.e., Q1 2020).
The reduction in loan forgiveness for a reduction in wages can be avoided if the borrower restores by e wages the employee was earning as of as compared to wages paid between . Keep an eye out for further guidance on this issue from the SBA.
The SBA is required to issue final guidelines on loan forgiveness within 30 days of , the day the CARES Act was enacted
Pursuant to U. The amount of PPP loan forgiveness will be reduced to the extent loan proceeds are used for qualified non-payroll costs in excess of 25% of the total amount eligible for forgiveness.It is currently unclear if the 25% cap is applied on the loan amount or the amount eligible for forgiveness.
- A formal application yet to be released by the SBA;
- Documentation verifying the number of full-time equivalent employees on payroll and pay rates for the referenced periods including payroll tax filings to the IRS, state income, payroll and unemployment insurance filings and payroll registers, among other support;
- If you work with a PEO, you should save your payroll invoices supporting the payroll costs, employee benefits, and retirement benefits paid;
- Documentation supporting other covered expenses (mortgage interest, rent, utilities) including canceled checks, payment receipts, account statements, invoices, and/or other documents;
- Certification from your company representative that the documentation presented is true and correct and the amount for which forgiveness is requested was used to retain employees, and /or make payments on a covered expense (interest on a mortgage, rent or utilities); and
- Any other documentation the SBA determines necessary
The PPP lender is required to make a decision on loan forgiveness no later than 60 days after an application has been submitted. PPP loan amounts forgiven will be paid by the Small Business Administration (SBA) directly to the lender.
Pursuant to the SBA Interim Rules, if PPP funds are used for unauthorized purposes, the SBA will direct you to repay these amounts. If you knowingly use the funds for unauthorized purposes, you will be subject to additional liability such as charges for fraud. If a shareholder, member, or partner uses PPP funds for unauthorized purposes, the SBA will have recourse against these individuals for the unauthorized Massachusetts installment loans for bad credit use.
In its interim rules dated , the SBA stated that it will issue additional guidance on loan forgiveness. Additional guidance may change and/or clarify the manner in which loan forgiveness and related reductions in loan forgiveness are calculated.
Our Anchin COVID-19 Resource Team continues to monitor the ongoing flow of clarifications and changes to the PPP Program by the Treasury. Please contact your Anchin Relationship Partner for additional information or contact us at [email protected] .
