Payroll Protection Program Loan Forgiveness

On May 15th, 2020, the Small Business Administration, in consultation with the U.S Department of Treasury, released information regarding the forgiveness of the Paycheck Protection Program (PPP). Which includes an application and detailed instructions.

The following information is to guide small business along with non-profits in Minnesota to assist in their PPP loan forgiveness.

The application and instructions for loan forgiveness include multiple measures to simplify the process and reduce compliance burdens for borrowers:

• An “alternative payroll covered period” to calculate payroll costs, that aligns with the borrowers’ regular payroll cycle.
• Flexibility to include both payroll and non-payroll expenses incurred or paid for during the eight-weeks following PPP loan advance
• Step-by-step instructions to correctly calculate information required by the CARES Act to confirm eligibility of PPP loan forgiveness
• Statutory exemptions from loan forgiveness based on rehiring by June 30
• Borrowers who have made good-faith, written offer to rehire a declined worker, have a new exemption from loan forgiveness

Summary of Costs Eligible for Forgiveness:

Borrowers are eligible for forgiveness for the following costs:

1. Eligible payroll costs Borrowers are eligible for forgiveness on payroll costs during the eight-week period (56 days). Borrowers are able to calculate this by using either the direct eight-week period following the loan advance or the Alternative Payroll Covered Period, which creates a flexibility to align with borrowers’ regular payroll cycle.  Payroll costs are considered paid on the day the payroll checks are distributed or the day the ACH transaction is set to take place.  Payroll costs are considered incurred on the day the employee earns the pay.  Borrowers incurred payroll costs at the time of the last Covered or Alternative Payroll Covered Period may be eligible for forgiveness if paid on or before the next regular payroll date. Each individual employee may not exceed $100,000 of annual cash compensation, prorated to the covered period, to be eligible for forgiveness.  Payroll costs both incurred and paid in the eight-week period may only be counted once.
2. Eligible non-payroll costs 
   1. Covered mortgage obligations: Interest (not including and prepayment or payment of principle). This may include obligations on real or personal property incurred before February 15, 2020;
   2. Covered rent obligations: this includes business rent or lease obligations for real or personal property in force before February 15, 2020; and
   3. Covered utility payments: payments for services including electricity, gas, water, transportation, telephone, or internet, for which services began before February 15, 2020.

All eligible non-payroll costs must be paid during the Covered Period or incurred during the Covered Period and paid on or before the next regular billing date. Eligible non-payroll costs       may not exceed more than 25% of total forgiveness amount.

Click her to view the application and detailed instructions https://content.sba.gov/sites/default/files/2020-05/3245-0407%20SBA%20Form%203508%20PPP%20Forgiveness%20Application.pdf

Please feel free to contact us with additional questions or concerns.