On Friday afternoon, the SBA released additional guidance on several key elements related to PPP forgiveness, as well as a PPP Loan Forgiveness Application. Some areas that have been better defined, include:

Alternative Payroll Covered Period Added

  • For payroll costs only, you can align the start of the eight week (56 day) period with your first payroll after obtaining funding. For example, if your PPP funded on April 20, and your first payroll is April 26, then the eight week period that payroll is covered would start on April 26.

Cash vs. Accrual on Payroll and Other Costs

  • Clarification was added to say “paid or incurred” as it relates to payroll vs. just incurred. Payroll incurred but not paid at the end of the eight week period will count towards forgiveness if paid on the next payroll date.
  • For Other Costs, the same “paid or incurred” language was added. Costs are eligible for forgiveness if incurred during the eight week period and paid on the next regular billing date.

Full-Time Equivalents (FTE) Defined

  • FTE’s to be calculated based on a 40 hour week.

Wage Reductions

  • Clarification was added that the 25% safe-harbor related to a reduction in wages paid is based upon average ANNUALIZED amounts. The average Annualized payroll for the eight week period that is covered will be compared against the average Annualized payroll for the period of January 1, 2020, to March 31, 2020.

If you have additional questions or would like to discuss strategies for maximizing the benefits of your PPP loan(s), contact the advisors at SSF.