Paycheck Protection Program Loan Forgiveness (SBA Form 3508)
There has been a great deal of anticipation regarding the release of Small Business Administration (SBA) guidance on the forgiveness of Paycheck Protection Program Loans (PPPL).
The SBA has recently issued a set of documents collectively referred to as the PPPL Forgiveness Application (SBA Form 3508) including: (1) PPP Loan Forgiveness Calculation Form, (2) PPP Schedule A and (3) PPP Schedule A Worksheet along with instructions for the forms and a list of documents each borrower must submit with their forgiveness application.
Download here SBA Form 3508 Paycheck Protection Program Loan Forgiveness Application (5-17-20) (2) a copy of the PPPL Forgiveness Application for your review and use in determining the forgivable portion of your PPP loans.
These documents primarily provided clarification of existing PPPL forgiveness requirements including:
- “Covered Period” for Allowable Expenses represents the eight-week (56-day) period after receipt of PPP loan proceeds.
- “Eligible Payroll Costs” represent payroll costs paid and payroll costs incurred during the Covered Period. Payroll Costs are required to represent 75% of forgiveness amount. Payroll costs incurred but not paid during the Covered Period are still eligible for forgiveness if paid on or before the next regular payroll date.
- Compensation to Owners during the Covered Period is limited to the lesser of $15,385 for each individual or the eight-week equivalent of their applicable 2019 compensation.
- Average full-time equivalency (FTE) is defined as 40 hours per week.
- “FTE Reduction Exceptions” defines conditions where exceptions are available in the FTE calculation for relief when an employee declines to return to work or voluntarily resigns and is not replaced.
- “FTE Reduction Safe Harbor” states that borrowers that restore FTE levels by June 30, 2020 to February 15, 2020 levels will be exempt from loan forgiveness reduction from Covered Period FTE employee level reductions.
- Documentation, Representation, and Certification requirements were defined
Please note that it is anticipated that additional SBA guidance on PPPL forgiveness will be issued in the future to provide a further understanding of the expectations for the Lenders and Borrowers.
If you have questions or require assistance with finance-related matters, please get in contact with us at Alaniz & Associates, and we will be happy to assist you.
