2020-39: PPP loan forgiveness guidance released - Spidell

2020-39: PPP loan forgiveness guidance released

The SBA has released the long-awaited loan forgiveness guidance and a Loan Forgiveness Application that Paycheck Protection Program borrowers will submit to their lenders.

Here is what we learned:

  • The SBA is using a 40-hour full-time equivalency standard rather than the 30-hour FTE standard applied to most SBA loans. However, borrowers may use a simplified method that assigns a 1.0 for employees who work 40 hours or more per week and 0.5 for employees who work fewer hours (even if the employees worked less than 20 hours per week);
  • Payroll costs “paid and incurred” over the eight-week period have been a concern. The application clarifies that payroll costs incurred but not paid during the borrower’s last pay period of the eight-week forgiveness period are eligible for forgiveness if paid on or before the next regular payroll date. To make things a little less complicated, borrowers with a biweekly (or more frequent) payroll schedule may elect to calculate eligible payroll costs using the eight-week (56-day) period that begins on the first day for their first pay period following their loan disbursement date; and
  • Business rent or lease payments on leases of personal property that were in force before February 15, 2020, will qualify for forgiveness.

Here is what we still don’t know:

  • For retirement and health care plan contributions, the instructions do not limit the amount that may be claimed to a pro-rated amount for the eight-week period. Does this mean a borrower could contribute an annual amount during the eight-week period and qualify for forgiveness? We don’t think this is the case but we hope additional guidance will be issued to provide further clarification;
  • The application does not provide any additional guidance on self-rentals; and
  • The application also does not address the forgiveness of home office expenses for self-employed individuals, or any other issues for self-employed borrowers. We are hoping for additional guidance on forgiveness for these borrowers soon.

To view the full application and instructions, go to:


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