By now most of you have received your PPP loan proceeds. If you received your funds prior to June 5th, you now have the option of following either an 8 week timeline or a 24 week timeline. If you received your funds after June 5th, you are on a 24 week timeline. Your “time clock” starts the day your loan proceeds are received. It is very important to comply with the CARES ACT provisions that cover proper use and timing of funds to obtain loan forgiveness.
Find a number of tools that will help you in navigating the loan forgiveness process.
Download Forgiveness Application forms here. All forms are current from the SBA as of June 16, 2020 and reflect changes provided in the PPP Flexibility ACT of 2020.
Here is a tracking spreadsheet that will assist you with forecasting, tracking and summarizing your expenses paid from the PPP Loan funds. Make sure to utilize the Forecast tab and enter your expected qualified expenses over the 8-week period following the loan disbursement. This will help you plan and time expenses that need to be paid.
Also included is the Support Needed tab, which lists items your bank may potentially request for loan forgiveness. Additional guidance will be coming from the SBA so stay tuned.
This spreadsheet was provided by an SBA approved lender. They have given permission to share.
This tool will help you in the forgiveness application process. You may want to check with your lending institution as to whether they will accept it. It makes it much easier to calculate Full Time Equivalency (FTE) for your team as well as possible penalties for wage reduction.
In order to be eligible for forgiveness, PPP funds can only be used for the following items.
Payroll, including eligible benefits. These are group medical, dental, retirement, paid sick or family leave, state UC.
Individual compensation limited to $100,000 annual rate which is $15,385 for the 8-week period or $46,154 for the 24 week period. Business owners are capped at $15,384 for the 8 week period or $20,833 for the 24 week period. Eligible benefits for those individuals can be included in addition to these numbers.
Rent or leases in effect as of Feb 15th, 2020
Interest on loans that were in place as of February 15th, 2020. This is limited to mortgage loans and personal property loans that contain liens on your property. For example, your building or warehouse, or your trucks that are being held as collateral on the truck loan.
Utilities include electricity, water, gas, transportation, telephone and internet.
The key questions tend to come in around transportation and telephones. Telephones include land lines and cell phones. transportation includes gas for your company owned vehicles used to conduct your business.
A clarification of this is found in the Federal Register Vol. 85, No 76, Page 21479. I have highlighted that section here.
First, it’s important to remember that forgiveness of this loan is not automatic. You must request it from your bank.
If you don’t maintain the level of Full-time Equivalent (FTE) employees, as compared to a testing period, your forgiveness amount will be reduced UNLESS your employees were laid off between February 15th and April 26th AND you restored your full FTEs by December 31, 2020 (the RE-HIRE EXEMPTION – Changed from June 30th with the PPP Flexibility Act).
Much guidance in this area still needs to be addressed by the SBA. Please stay tuned.
Pay rates cannot be reduced by more than 25% for any employee making less than $100,000.
Any funds not forgiven become a 5-year loan with an interest rate of 1%. Payments are deferred for the first six months although interest will accrue. Therefore, the total loan is actually paid over an 54-month period. Be sure to consider the terms and payment amounts required on any loan balance not forgiven.
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