The SBA released the attached loan forgiveness application on Friday night. The application clarifies and adds the following regarding forgiveness:
- FTE is an employee that works 40 hours per week not 30 hours as previously presumed.
- Owners cannot increase compensation above 2019 amounts.
- 75% to be used toward payroll is based on forgiveness, not the loan amount
- FTE reduction exceptions:
- Fired for cause
- Voluntarily resigned
- Voluntarily requested and received a reduction of their hours
- Reduction in forgiveness is applied for both salary/hourly wage reduction and full-time equivalent (“FTE”) reduction.
- Safe harbor calculation for salary/hourly wage reductions; see bottom of page 7 for details.
- Safe harbor calculation for FTE reductions; see bottom of page 9 for details.
- Alternative payroll covered period – allows weekly and biweekly employers to sync 8-week covered period with payroll
- Payroll eligible for forgiveness generally must be paid and incurred during the 8-week period. Payroll incurred at the end of the 8-week period but not paid can be included if paid on or before the next regular pay date.
- Nonpayroll costs must be paid during the 8-week period or incurred and paid on or before the next regular billing date.
- Seasonal employers can use either of the lookback periods (2/15/19 – 6/30/19 or 1/1/20 – 2/29/20) now or a consecutive 12-week period between 5/1/19 – 9/15/19 when calculating prior-year FTEs for the reduction calculation.
- The application gets submitted to the lender after completion.
- Outlines documents required to be submitted for forgiveness on page 10.
We are working diligently to apply the updates of the application to our previously released spreadsheet. Give us a call if you have questions.