Between these two documents, the SBA has provided clarity in many areas in terms of how calculations should be made and the requirements for loan forgiveness. Some key takeaways from the two referenced documents :
- Borrowers may seek forgiveness for payroll costs for the eight weeks beginning on either:
- The date the funds are received from the lender (i.e., the start of the covered period); or
- The first day of the first payroll cycle in the covered period (this will be known as your “alternative payroll covered period” )
- Payroll costs can include:
- Hazard Pay
- Cash tips or the equivalent (based on employer records of past tips)
- The SBA laid out clear guidelines on how to avoid a loan forgiveness reduction when dealing with an employee whom you offered to rehire but the employee declined the offer. In order to avoid a reduction in forgiveness :
- The borrower must document a good faith, written offer to rehire such employee at the same pay level that the employee earned in the pay period prior to separation
- The borrower must inform the state unemployment insurance office of such employee’s rejected offer within 30 days of the employee’s rejection
- A borrower’s loan forgiveness amount will not be reduced if an employee is fired for cause, voluntarily resigns, or voluntarily requests a schedule reduction.
Also, we are aware that Congress will soon be voting to change some key PPP requirements, the two biggest being:
An extension of the covered period from 8 weeks to 12, 16, or 24 weeks, and
Eliminating the “75% rule” requiring borrowers to spend at least 75% of their PPP funds on payroll costs to qualify for full loan forgiveness.
Should you have questions regarding your PPP loan, please contact us.