On Friday, May 15th, the Small Business Administration (SBA) released the Paycheck Protection Program (PPP) Loan Forgiveness Application which attempts to answer many of the lingering questions loan recipients have about loan forgiveness. Here is a recap of what we now know:
Counting Your Full Time Employee Equivalents
Employers will have the choice of using one of two methods to calculate the number of full-time employee equivalents (FTE).
A full-time employee typical works 40 hours or more per week. However, 40 hours is applied to every period (the 2/15/19-6/30/19 or the 1/1/20-2/29/20) for computing your “base level” FTE.
Employers may choose a “simplified” approach where anyone working 40 or more hours per week counts as “1” and anyone working under 40 hours per week would be counted as “.5”
Restoring Your Full Time Workforce
An employer has until June 30, 2020 to restore the number of full-time equivalent employees if workforce reductions occurred between February 25, 2020 and April 26, 2020.
Payroll Limits for You and Your Full Time Workforce
Owner compensation cannot be increased from 2019 levels and is capped at $15,385 during the eight-week period which is in line with the $100k-per-year limitation. This is for cash compensation only.
Payroll cost will be capped at $15,385 per FTE during the eight-week period which is line with the $100k per year limitation. This is for cash compensation only.
Defining Your Eight Week Period
There are two methods for defining your eight-week period. The borrower will have the option to have the eight week period start from the date the funds were disbursed or may use the “alternative payroll covered period,” which begins on the first payroll period following the loan disbursement.
Defining Incurred vs Paid Payroll Cost
Payroll cost that are incurred during the loan period (using either method) will be allowable in the forgiveness even if the paycheck date falls outside the loan period. For example, if you have one week of payroll incurred out of a two-week payroll period, you will be eligible to use the one week of payroll incurred, even if it has not been paid yet. This was done to simplify the administration of moving payroll dates around. The important thing to note is the word incurred. This means hours worked during that portion of the pay period, and not the entire pay period.
Other Cost Paid Dates Defined
For payments associated with “other cost”, any bill, such as rent, that would have been for the period in which the loan was in force, that come after the end date of the eight week period, may be included as long as the bill is paid by the next regular billing date. The SBA appears to be trying to simplify items that would be for one of the months included, however the billing date falls outside the actual eight weeks. This is not to be read as “prepay” future expenses, but to pay bills which you would have incurred.
75/25 Computation Simplified
The application will take the lesser of the total loan amount, the total of payroll cost divided by .75 or the total allowable forgiveness due to reductions. The application still asks for “other” expenses, but the computation is now simplified.
Your Document Requirements
Including the application and worksheet, the borrower will need to provide:
Clients are strongly advised to contact their E. Cohen advisor to learn more about the Payroll Protection Program and the factors for loan forgiveness.
Cookie | Duration | Description |
---|---|---|
cookielawinfo-checkbox-advertisement | 1 year | Set by the GDPR Cookie Consent plugin, this cookie is used to record the user consent for the cookies in the "Advertisement" category . |
cookielawinfo-checkbox-analytics | 1 year | Set by the GDPR Cookie Consent plugin, this cookie is used to record the user consent for the cookies in the "Analytics" category . |
cookielawinfo-checkbox-functional | 1 year | The cookie is set by the GDPR Cookie Consent plugin to record the user consent for the cookies in the category "Functional". |
cookielawinfo-checkbox-necessary | 1 year | Set by the GDPR Cookie Consent plugin, this cookie is used to record the user consent for the cookies in the "Necessary" category . |
cookielawinfo-checkbox-others | 1 year | Set by the GDPR Cookie Consent plugin, this cookie is used to store the user consent for cookies in the category "Others". |
cookielawinfo-checkbox-performance | 1 year | Set by the GDPR Cookie Consent plugin, this cookie is used to store the user consent for cookies in the category "Performance". |
ep201 | 30 minutes | This cookie is set by Wufoo for load balancing, site traffic and preventing site abuse. |
PHPSESSID | session | This cookie is native to PHP applications. The cookie is used to store and identify a users' unique session ID for the purpose of managing user session on the website. The cookie is a session cookies and is deleted when all the browser windows are closed. |
viewed_cookie_policy | 1 year | The cookie is set by the GDPR Cookie Consent plugin to store whether or not the user has consented to the use of cookies. It does not store any personal data. |
Cookie | Duration | Description |
---|---|---|
__cf_bm | 30 minutes | This cookie, set by Cloudflare, is used to support Cloudflare Bot Management. |
Cookie | Duration | Description |
---|---|---|
_ga | 2 years | The _ga cookie, installed by Google Analytics, calculates visitor, session and campaign data and also keeps track of site usage for the site's analytics report. The cookie stores information anonymously and assigns a randomly generated number to recognize unique visitors. |
_ga_4JQW09H0BS | 2 years | This cookie is installed by Google Analytics. |
_gat_gtag_UA_539141_3 | 1 minute | Set by Google to distinguish users. |
_gid | 1 day | Installed by Google Analytics, _gid cookie stores information on how visitors use a website, while also creating an analytics report of the website's performance. Some of the data that are collected include the number of visitors, their source, and the pages they visit anonymously. |
CONSENT | 2 years | YouTube sets this cookie via embedded youtube-videos and registers anonymous statistical data. |
vuid | 2 years | Vimeo installs this cookie to collect tracking information by setting a unique ID to embed videos to the website. |
Cookie | Duration | Description |
---|---|---|
VISITOR_INFO1_LIVE | 5 months 27 days | A cookie set by YouTube to measure bandwidth that determines whether the user gets the new or old player interface. |
YSC | session | YSC cookie is set by Youtube and is used to track the views of embedded videos on Youtube pages. |
yt-remote-connected-devices | never | YouTube sets this cookie to store the video preferences of the user using embedded YouTube video. |
yt-remote-device-id | never | YouTube sets this cookie to store the video preferences of the user using embedded YouTube video. |