SBA and the Treasury have finally issued guidelines regarding loan forgiveness under the PPP Program. There were a lot of uncertainties regarding this part of the program. Some of the answers can be found in the application for loan forgiveness itself. Some highlights:
Alternative Payroll Covered Period – The SBA had previously indicated that the covered period during which the expenses incurred or paid, would begin on the date of the loan disbursement and the following 8-weeks. At the election of the borrower, the application provides for another option strictly related to payroll. There is an Alternative Payroll Covered Period which will begin with the first day of the first pay period following the PPP loan disbursement date and continue for the following 8-weeks.
- Loan Necessity: The SBA will be reviewing loans in excess of $2 million for the “loan necessity” certification. The application includes a check box if the borrower, along with affiliates of the borrower, have a PPP loan with the original principal amount in excess of $2 million.
- Qualifying Expenses: Qualifying expenses can either be paid during the covered period (or for payroll during the alternative payroll covered period) or incurred during the covered period (or for payroll during the alternative payroll covered period) and paid within their normal billing cycle after the covered period ended.
- Rent: Will include both real and personal property.
- Reduction in Loan Forgiveness: There are very specific rules regarding loan forgiveness and situations where the business has not maintained full time equivalents (“FTEs”) or if there has been a reduction in the salary and wages paid during the covered period.
To see a copy of the SBA Loan Forgiveness Application click HERE.
For a discussion by the UHY CPA firm click HERE.
For a discussion by the Bonadio CPA Firm click HERE.
Click HERE for next story
Click HERE for previous story