New Loan Forgiveness Guidance

On June 22, the SBA and Treasury released additional guidance surrounding the Payroll Protection Program (PPP) Interim Rule. The new guidance provided clarification regarding loan forgiveness filing dates, owner-employee payroll costs, and Safe Harbor reductions.

Loan Forgiveness Filing Dates

• Loan forgiveness applications must be submitted before the loan's maturity, provided the borrower has used all the proceeds.
• Borrowers originally needed to elect either an eight week or 24 week covered loan period. This change will allow borrowers to designate a forgivable loan period between eight and 24 weeks, as long as the funds are exhausted.
• If borrowers do not apply for loan forgiveness within ten months of the expiration of the covered period, borrowers must begin paying principal and interest.

 Owner-employee Payroll Costs

• C-corporation owner-employee payroll costs include cash compensation, employer retirement, and health insurance.
• S-corporation owner-employee payroll costs include cash compensation and employer retirement; health insurance is not included.
• Schedule C filers payroll costs are based on 2019 profit; the calculation does not include retirement or health insurance.
• General partners payroll costs are based on 2019 net earnings from self-employment multiplied by 92.35.

 Safe Harbor Reductions

• The FTE reduction provision due to business activity now includes borrowers unable to restore their total workforce due to state closure mandates based upon federal guidance.

We anticipate the release of additional guidance soon and will continue to send updates.

Contact your Whittlesey advisor for assistance interpreting the ever-changing guidance and discuss ways to maximize loan forgiveness.