PPP Forgiveness Calculator

There has been a lot of discussion regarding  criteria for PPP Loan Forgiveness. Last weekend  the SBA made some clarifications on a few issues - the following points are the highlights. At the end of the highlights are a PPP Forgiveness Calculator and Paycheck Protection Program Application for your use. If you would like to participate in a Small Business Leaders Peer Round Table discussion on PPP and other issues, please register for FREE and join us on May 27 at 10:30 CST >>> https://forms.gle/24kghnpkQPWzLLac6

FORM TO SUBMIT: Form 3508 with appropriate schedules must be filled out to request Forgiveness.  The loan issuing bank makes the initial decision regarding forgiveness and percentage of forgiveness.

FORGIVENESS ITEMS:

Payroll, Business Mortgage Interest Payments, Business rent or Lease Obligations, and Business Utility Payments. Please note that 75%of the Forgivable amount must be payroll.

The PPP Forgiveness has been a moving target so it is possible that there will be additional changes.

EIGHT WEEK FORGIVENESS PERIOD CAN BE CASH OR ACCRUAL BASIS

This period can begin on the date that you first received the loan. But payroll costs can be computed on a cash or an accrual basis. If your payroll costs are not paid inside the eight weeks, then in order for them to be considered for forgiveness, they must be paid by the next regularly scheduled payroll period.

Your non-payroll costs are treated in the same manner. They must be paid or incurred during the initial period. If they are not paid inside the eight weeks, then they must be paid on or before the next regular billing date of the expense.

FTE REDUCTION FORGIVES RULES

Loan forgiveness is based upon the number of Full Time Employees (FTE) during the eight week period as compared to a past reference. These new rules provide a distinct break from the past.

1 - If one of you employees works more than 40 hours in a week, they cannot count as more than one person. This is common with salaried employees or workers with overtime.

2 - With part time employees, you must add their hours together and divide by 40 hours, rounding to the nearest tenth to come up with the number of FTEs. 

3 - An Alternative Method for computing part time employees is to elect to simply count each one as .5 FTEs.

How this works with commissioned employees, people paid by the job, or by the piece, is anyone's guess.

FTE Reduction Exceptions

Borrowers will not be penalized for any FTE Reductions if:

1 - The borrower made a good faith effort in writing to rehire the employee during the period that was rejected in writing by the employee

2 - Employees were fired during the period for cause

3 - Employees voluntarily resigned during the period

4 - Employees voluntarily requested and received a reduction of their hours

FTE Reduction Safe Harbor

There is a Safe Harbor Rule. Borrowers who meet the following criteria are exempt from The FTE Reduction in loan forgiveness if both of the following rules are met...

1 - The Borrower reduced its FTEs in the period beginning 2/15/20 and ending 4/26/20 and

2 - The Borrower restored its FTE Levels no later than 6/30/20 to the level that existed prior to 2/15/20.

EXAMPLE:  According to the forms just released by The SBA, if you had 10 employees on Valentines Day, fired them all two days later and rehired all of them on 6/29/20, they will supposedly let you off the hook.

Reduction of Non-Payroll Costs

Another SBA Change: The same percentage used to forgive payroll is used for non-payroll items. 

Attached is the PPP Loan Forgiveness Document and a PPP SpreadSheet Calculator provided by Michael Silver CPA Firm.  After reading all this, If you would like to participate in a Small Business Leaders Peer Round Table discussion of PPP or other issues, please join us on May 27 at 10:30 CST >>> https://forms.gle/24kghnpkQPWzLLac6

PPP Forgiveness Calculator: https://docs.google.com/spreadsheets/d/1nQOFyLLVH6bEMxSyYTgQpLqzjh4NBwThUMUH2ofwB3A/edit?usp=sharing

Paycheck Protection Program - Application: https://drive.google.com/file/d/19xriM1twfEPxd0yxkhHZyRvRdl8YBBf1/view?usp=sharing

P.S.This important information was supplied by Chris Anumdson of Accounting Solutions LTD and the PPP Calculator supplied by Michael Silver CPA.

I hope you will attend one of our virtual roundtables!

 Ray Silverstein

Cultivating Business Success

PRO, President’s Resource Org.

Business Owner Peer boards

[email protected]

www.peeradvisoryboard.com

Call/Text 312 593-5133

Author: Best Secrets of Great Small Businesses & The Small Business Survival Guide