SBA Issues More Guidance on PPP Loan Forgiveness

The SBA on Friday issued a new interim final rule explaining in more detail the contours of PPP loan forgiveness. Together with the forgiveness application, the new IFR answers some of the many questions we’ve been getting about loan forgiveness. Some of the highlights include:

  • It is OK to give employees bonus or hazard pay — except for owner-employees, who are limited to the lesser of 8/52nds of 2019 compensation, subject to the $100,000 cap (which tops out at $15,385 per individual, in total across all businesses).
  • It is OK to pay people even if they are not working. Your pay should be based on that employee’s typical schedule.
  • You can get forgiveness for non-payroll costs either PAID during the covered period, or INCURRED during the covered period and paid on or before the next regular billing date, even if the billing date is after the covered period. You still can’t pay ahead, though.
  • Similarly, you can use the funds for the first payroll payment made after the loan proceeds were issued, or for any payroll incurred during the 8 weeks following the loan fund hitting your account, or during the “alternative payroll period,” as defined.
  • If you are counting part time employees, you have the option to just count each part timer as .5 full time employees rather than having to add up the exact hours, as long as you do so across the board
  • Document changes in personnel during the 8 week period. If someone is offered their job back and refuses, is fired for cause, or requests a schedule reduction or voluntarily resigns, you are going to have to prove that up in order to not have your forgiveness cut.
  • The Banks have 60 days to assess your application, and then the SBA will have 30 days to approve and pay the Bank the forgiveness amount. The rest, if any, is a loan at 1% interest, with the first payment due 6 months after funding and the entire balance due within 2 years of funding. And remember, even if it is not forgiven, you must spend the money on covered

    We provided a Webinar (You Tube link below) to answer many of these questions last week before the regulations came out. Most of what was in that webinar is still correct — but note that things are changing daily. We hope it’s helpful to you.

    Contact us here or call 813-778-5161 to schedule an appointment if you want professional help preparing your PPP forgiveness application.