The Small Business Administration (SBA) has released the PPP loan forgiveness application. It should be completed by borrowers and then submitted to their lenders as it sets forth all documentation required to verify their expenses. It also clarifies the following related points:
- If a mortgage obligation had been put in place prior to February 15, 2020, they may include payments of interest on real or personal property.
- Non-cash compensation payroll costs are limited to employer contributions for employee health insurance & retirement plans – and employer state & local taxes assessed on employee compensation. It should also be noted that owner-employee or self-employed individual or general partners cannot exceed eight weeks’ worth of 2019 compensations (during the eight-week period).
- FTEs (full-time equivalents) are counted as of June 30, 2020 for the rehire safe harbor headcount reduction calculation. Note: FTEs are considered on a 40 hour-per-week basis.
- To properly address the salary reduction calculation, borrowers must compare the average annual salary or hourly wage from January 1, 2020 to March 31, 2020 to the average annual salary or hourly wage during the eight-week period … a specific calculation is provided for hourly workers.
- Borrowers with bi-weekly payroll may calculate eligible payroll costs using the eight-week period beginning on day one of their first pay period following loan disbursement.
You may view the full application here.
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The information contained in this document is intended for educational purposes and to provide a general understanding of regulatory events, legislative changes and the law – not to provide specific legal advice.