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May 19,2020

The Small Business Administration (SBA) has released the Paycheck Protection Program Loan Forgiveness Application and Instructions. The documents released on May 15, 2020 will help small businesses seek forgiveness at the conclusion of the eight week covered period, which begins with the disbursement of their loans.

The form and instructions include several measures to reduce compliance burdens and simplify the process for borrowers. Some additional guidance provided in these documents, include:

  • Clarifying costs eligible for forgiveness including eligible payroll costs and eligible nonpayroll costs.
  • Defining full-time employees. The definition of full-time employees is those that work at least 40 hours or a combination of employees that work 40 hours. The FTE calculation has been defined to include 40-hour employees as one and those working less than 40 hours as a half employee. The guidance confirms a safe harbor for employees who are terminated, voluntarily resign, or voluntarily reduced their hours by request. The instructions explain June 30 will be a safe-harbor date for restoration of payroll and headcount.
  • Expanding instructions stating the 75 percent requirement on expending loan proceeds toward payroll costs to include a “Modified Total.” The amount is the payroll costs plus non-payroll costs reduced for reductions in salary and wage and then multiplied by FTE reduction percentage.
  • Providing a list for documentation requirements to be submitted with the forgiveness application and a list of documents that need to be retained for six years.
  • Clarifying the covered period for forgiveness as the eight-week covered period from loan funding or an alternative period beginning on the first day of the first payroll period and ending 56 days later.
  • Simplifying guidance regarding the cut-off procedures to allow for the last pay period to be paid on or before the next payroll date, eliminating the need for a special payroll. And, to allow for occupancy and interest costs to be either paid or incurred during the covered period so long as they are paid with the next billing cycle.

Click here to view the application and instructions.

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