On Friday, May 15, 2020, the Small Business Administration (SBA) published its Paycheck Protection Program (PPP) Loan Forgiveness Application, with instructions, allowing borrowers to use their regular payroll schedule. Borrowers were concerned about matching their payroll cycle to the testing or covered period in the forgiveness formula.
One of the most significant aspects of the SBA’s Paycheck Protection Program is the forgiveness provision where the loans become grants for companies that maintain their workforce levels. Companies that have met the stringent requirements should review the Loan Forgiveness Application and carefully follow the instructions. Some measures may reduce compliance burdens for borrowers, including:
- Calculating payroll costs using an “alternative payroll covered period” that aligns with borrowers’ regular payroll cycles.
- Flexibility to include eligible payroll and non-payroll expenses paid or incurred during the eight-week period after receiving their PPP loan.
- Instructions on how to perform the calculations required by the CARES Act to confirm eligibility for loan forgiveness.
- Implementation of statutory exemptions from loan forgiveness reduction based on rehiring by June 30.
- Addition of a new exemption from the loan forgiveness reduction for borrowers who have made a good-faith, written offer to rehire workers that was declined.
The application requires extensive information about the business and loan. Before you begin, it is important you have your paperwork in order and ready to complete the application.
If you have questions about this provision or other PPP forgiveness questions, contact one of the individuals listed below.
Mark R. Dreher, CPA, Managing Partner
Barry S. Graham, CPA, CMA, Senior Audit Manager
Brandon W. Temple, CPA, Tax Manager