PPP Loan Forgiveness Update – September

The time is fast approaching where most businesses will need to finalize their 24 week period where they are tracking their covered PPP loan expenses. After this period ends, you will need to complete the PPP Loan Forgiveness Application, either the EZ version or the long version depending on your situation. Banks will allow you 60 days from the end of your Covered Period to apply for forgiveness though their process.

Let’s go through a quick recap on what you’ll need to start this process

(For more details on who can use the EZ form, please refer to our previous webinar on PPP Loan Forgiveness.)

PPP EZ Form Background

For most small businesses, the fairly simple five-page application will ask you to submit details such as payroll and nonpayroll costs, adjustments for wage reductions and potential forgiveness amounts.

The loan forgiveness application also includes measures to make compliance easier for small business including the following provisions:

• Option to use an “alternative payroll covered period” that better aligns with the normal payroll cycles for the business.
• The flexibility to include eligible payroll and nonpayroll expenses paid or incurred during the 24-week period instead of the original 8-week period.
• Easy instructions on how to calculate loan forgiveness.
• Exemptions to help with the challenges of rehiring workers by borrowers who made a “good-faith, written offer to rehire workers” that was later declined.
• Exemptions for businesses that experienced reduced business activity during the Covered Period due to COVID-19 restrictions.

These changes to the original loan forgiveness worksheet are available to all eligible borrowers who have not reduced wages or salary more than 25% from the period previous to receiving their loan proceeds and either did not reduce the number of employees or can show justifiable reasons for reduced business activity.

Using the 24 Week Period

It’s important to note that the 24 week period starts either the day you received your loan proceeds (“Covered Period”) or the beginning day of your pay period following the funds distribution (Alternative “Covered Period”). Make sure you have both these dates figured accurately.

From what we have experienced in helping several clients through this process, you should wait until you’ve completed your 24 week period before entering into the loan forgiveness process. You want to be sure your payroll numbers reach at least 60% of the loan proceeds, and if you’ve had reduced business activity, you many need that whole period.

If you received an EIDL grant, you will need to note that amount on the loan forgiveness application and account for that in your payroll totals.

Reports You’ll Need

• Detailed payroll reports for January 1 – March 1, 2020
• Detailed payroll reports for the 24 week standard or alternative Covered Period
• Reports showing employee count from January 1, 2020 through the end of the Covered Period
  • If you were unable to hire quailed people, or lost employees for unrelated reasons, be sure to have documentation to support those efforts.
• Documentation to support any reduced business activity between February 15, 2020 and the end of the Covered Period due to compliance with (qualified) COVID-19 restrictions.
• Loan information and all documentation used to obtain the loan initially and any documentation to support material compliance with PPP requirements.

This all sounds a bit complicated, but it’s fairly simple and there are plenty of exemptions if you have not been able to maintain your full business activity, or had difficult bring employees back during the Covered Period. If you’re a client of Infinium HR, we’ll be happy to assist you with any reports you as well as consultation during the process.

If you have any questions in the meantime, please feel free to contact us at info@infiniumhr.com.