On Friday 5/15/20, SBA released a Loan Forgiveness Application that is designed to educate borrowers on how to apply for PPP loan forgiveness. Additional guidance – for both borrowers and lenders – is still expected from the agency.
The Alabama SBDC will host a webinar on Monday May 18 at 3pm to review the application and guidelines.
The application includes a worksheet that details how to calculate the amount of the loan that can be forgiven and provides a summary of costs eligible for forgiveness. The SBA also provided a list of documents borrowers have to submit with their forgiveness applications.
The document clarified a few items that have frustrated both borrowers and lenders since the program’s inception:
The “Incurred vs Paid” Confusion
· Eligible Payroll Costs: “Payroll costs are considered paid on the day that paychecks are distributed or the Borrower originates an ACH credit transaction. Payroll costs are considered incurred on the day that the employee’s pay is earned. Payroll costs incurred but not paid during the Borrower’s last pay period of the Covered Period (or Alternative Payroll Covered Period) are eligible for forgiveness if paid on or before the next regular payroll date.“
· Non-Payroll Costs: An eligible nonpayroll cost must be paid during the Covered Period OR incurred during the Covered Period and paid on or before the next regular billing date, even if the billing date is after the Covered Period.
Alternative Payroll Covered Period: Allows the borrower to align PPP forgiveness with the payroll period.
· “For administrative convenience, Borrowers with a biweekly (or more frequent) payroll schedule may elect to calculate eligible payroll costs using the eight-week (56-day) period that begins on the first day of their first pay period following their PPP Loan Disbursement Date (the “Alternative Payroll Covered Period”).”
· Note: The alternative covered period dates only applies to payroll. The “covered period” begins on the loan disbursement date.
Average FTE Calculation:
· “For each employee, enter the average number of hours paid per week, divide by 40, and round the total to the nearest tenth. The maximum for each employee is capped at 1.0. A simplified method that assigns a 1.0 for employees who work 40 hours or more per week and 0.5 for employees who work fewer hours may be used at the election of the Borrower.”
Access the Loan Forgiveness Application Here.
· US Treasury: CARES Act / PPP Resource Page for Small Business
· SBA Disaster Loan
· Alabama Department of Labor
Need to check on the status of your Disaster Loan application? Scroll down for instructions.