There’s new recent guidance that’s come out about the Paycheck Protection Program (PPP) from the SBA. The PPP loan forgiveness provisions are pretty complicated, and if you want to dig into the specifics of what applies to your business, we highly recommend you review this guidance in detail. (Note: guidance as of 5/22/2020)

If you’re looking for the fill-in-able PPP forgiveness app to use for your business, you can access a copy here.

And as a huge help to those of you with complex calculations, the AICPA has created a calculator that you can access here for FREE. It’s a really helpful tool in making sense of all these details.

Here are some important bullets to be aware of:

  • The EIDL advance you might have received is supposed to reduce the PPP forgiveness amount. While this isn’t really evident (in our opinion) on the form itself, it’s been mentioned in other guidance, so I would assume your forgiveness gets reduced by the EIDL advance (not the full EIDL loan amount) unless you hear otherwise.

  • Your PPP tracking period is EITHER the 56 days including the receipt of your funds OR if you have a biweekly or weekly pay schedule, you can push it to the start of the next pay period and start counting 8 weeks from there.

  • Allowable costs of the nonpayroll kind are: Mortgage interest (on real OR personal property), rent or lease expenses (again on real OR personal property—meaning equipment leases would count), and utilities (electric, gas, water, transportation (unclear what that means), phone, and internet.

  • Allowable payroll costs are: any form of wages, employer health and retirement contributions, state and local payroll taxes the employer paid (not FICA) and likely only state unemployment tax.

  • Here’s a gem: Payroll costs you incurred during the covered period but where the pay day didn’t fall until after the end of the covered window ARE allowed, as long as they’re paid out by the next pay day. (So no need to run a short payroll to get it paid in the window.)

  • Reductions: Your forgivable amount will be reduced by a) the amount by which salaries / wages have been cut more than 25% below Q1 levels, and b) on a percentage basis of the FTE (full time equivalents) during your covered period over the FTEs as of 2/15/19 through 6/30/19 OR 1/1/20 through 2/29/20 (depending on which window you used when applying).

  • Big Opportunity: If you’re looking at a reduction because your staff size shrunk relative to the levels you applied on, as long as people are reinstated by June 30, 2020 they will not count against your current headcount. (Likewise, FTE reduction doesn’t apply to: someone who voluntarily resigned, someone who volunteered for a reduction in hours, terminations for cause, or people you tried to rehire who rejected your offer.)

  • One other sneaky provision: Owner compensation during this period is capped at the LOWER of a) $15,385 (which is a $100k equivalent during 8 weeks) OR b) (8/52 X your 2019 comp). This means you can’t take more than 2 months’ worth of compensation at 2019 levels—which will be a loss to owners who have had to step in and fill staff roles and pay themselves accordingly.

Be careful with this process—it’s a complicated one. And stay safe and healthy out there.

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