PPP Loan Forgiveness Application
The SBA released the Paycheck Protection Program (PPP) Loan Forgiveness Application, including instructions for how to complete it.
The application clarifies some points which were previously unresolved, and we review those below. We expect additional guidance in the coming days/weeks and will continue to send updates as this information becomes available.
Click here to view the application. The application must be completed and submitted to the Lender servicing your loan. You may also be able to complete this application electronically through your Lender. We highly recommend that you work closely with your CPA and/or attorney throughout this process.
Below are some important details outlined on the application. 1) Alternative Payroll Covered Period: a) If you have a biweekly (or more frequent) payroll schedule, you may elect to calculate eligible payrolls costs using the 8-week period that begins on the first day of your first pay period following the PPP Loan Disbursement Date. b) If you elect to use this Alternative Payroll Covered Period, you must apply this period where there is a reference on the application to "the Covered Period or the Alternative Payroll Covered Period." If there is a reference to the "Covered Period" only, you must apply the Covered Period - the 8-week period that began on the date funds were deposited in your account. c) Generally, only payroll related items will be allowed to use the Alternative Payroll Covered Period, while payments on other expenses will continue to refer to the normal 8-week Covered Period. 2) Payroll Costs Eligible for Forgiveness: a) Eligible payroll costs PAID during the 8-week Covered Period or Alternative Payroll Covered Period regardless of when they were INCURRED * NOTE: It is unclear how far in arrears you may pay wages with PPP funds and continue to count those wages towards forgiveness. Consult your CPA if this applies to you. b) Eligible payroll costs INCURRED during the 8-week Covered Period or Alternative Payroll Covered Period so long as they are PAID by a standard payment date defined for each cost type c) Payroll costs are considered PAID on the day that paychecks are distributed or the day the employer originates an ACH credit transaction (one banking day before the day the employees receive the money via Direct Deposit) d) Payroll costs INCURRED during your last pay period of the Covered Period (or Alternative Payroll Covered Period) are eligible for forgiveness if PAID on or before the next regular payroll date 3) Other Costs Eligible for Forgiveness: a) An eligible nonpayroll cost (e.g. covered mortgage and/or rent obligations and covered utility payments) must be PAID during the Covered Period or INCURRED during the Covered Period and PAID on or before the next regular billing date. 4) FTE Reduction Exception and Safe Harbor: a) The FTE Reduction Exception removes an employee from the FTE calculation on the application if they meet one of the following conditions AND the position was not filled by a new employee. - They refused a qualified offer of employment for the same hours at the same rate - They were fired for cause - They voluntarily resigned - They voluntarily requested and received a reduction of their hours b) The FTE Reduction Safe Harbor allows that an employer will not be penalized for an FTE reduction if the employer had reduced its FTEs for the period from February 15, 2020 through April 26, 2020 as compared to FTEs on February 15, 2020 and then later restores the FTE level back to the February 15 level by June 30th, 2020. Payroll Reports As outlined on the application, you will be required to provide documentation backing up all of the information you include on the application. Easytrack Payroll will send a separate email with instructions on how to get this information from your payroll account.