Guidance on loan forgiveness is evolving and rules may change, so check back for updates

Guidance on loan forgiveness is evolving and rules may change, so check back for updates

Loan Forgiveness Scenarios

Maria’s Eyecare received a PPP loan of $70,000 on . The timeline starts as soon as the company receives the loan + .

In the 8 weeks after receiving the loan, Maria’s Eyecare didn’t reduce the number of full-time-equivalent employees (FTEE) and didn’t reduce the pay of any employee****.

+ To obtain full forgiveness, loan proceeds must be spent during the Covered Period or Alternative Payroll Covered Period. To obtain full forgiveness, loan proceeds must be spent within 8 to 24 weeks immediately following disbursement of the loan, whichever is earlier. If you pay your employees on a biweekly or more frequent schedule, you may choose to use the Alternative Payroll Covered Period and begin the covered period on the first day of the first pay period following disbursement of the loan for qualifying payroll costs only.

The company elects to use the 8-week Covered Period length to meet the criteria* for loan forgiveness

  • The loan proceeds are spent, or qualifying costs are incurred, within the applicable Covered Period or Alternative Payroll Covered Period.
  • At least 60 percent of the forgiveness amount was used for payroll costs, and no more than 40 percent was used for the other permitted Loan Uses.
  • Staffing and pay levels must be maintained during the applicable Covered Period or Alternative Payroll Covered Period ****.
  • Employee gross pay, including salary, wages, commissions, bonuses, and tips, capped at the annualized value of $100,000 for the length of the applicable Covered Period or Alternative Payroll Covered Period. For an 8-week Covered Period, this limit is $15,385, which is the 8-week value of the annualized $100,000 cap. For employers using a 24-week Covered Period, this limit is $46,154.
  • All employer state and local taxes paid on employee gross pay, such as state unemployment insurance and employer-paid state disability insurance (in applicable states).
  • Employer-paid healthcare and group insurance benefits, including insurance premiums.
  • Employer-paid retirement benefits, including defined-benefit or defined-contribution retirement plans and employer 401(k) contributions.

Note: The definition of payroll costs excludes employer federal taxes, workers compensation premiums, payments to independent contractors, and payments to employees for leave covered under the Families First Coronavirus Response Act.

  • Payroll costs;
  • Interest on mortgage obligations, in force before ;

**** To determine whether adequate staffing levels have been maintained, the average number of full-time equivalent employees (FTEEs) during the Covered Period or Alternative Payroll Covered Period will be compared to one of two time periods. Borrowers may either use the period from , or . Seasonal employers may compare the average FTEEs employed during the Covered Period or Alternative Payroll Covered Period to either period listed above or to any consecutive twelve-week period between . If the number of FTEEs during the payday loans in Dickson TN Covered Period or Alternative Payroll Covered Period is lower than these earlier time periods, the amount of loan forgiveness may be reduced proportionately. However, the forgiveness amount will not be reduced by a failure to maintain staffing levels during the Covered Period or Alternative Payroll Covered Period if (a) the average FTEEs between is lower than the FTEES as of , and (b) the company restored the level of FTEEs by the end of the applicable Safe Harbor period, to be equal or higher to the FTEE levels as of . The Safe Harbor period ends on for borrowers who received their PPP loan prior to , and on the last day of the chosen covered period for borrowers who received their PPP loan or Second Draw PPP loan in or after . If the staffing reduction was made outside the ount may still be reduced even if the staffing reduction is later reversed.

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