The SBA just released a new round of frequently asked questions specifically targeted at providing guidance for Paycheck Protection Program (PPP) loan forgiveness calculations. These FAQs, which can be found here, have been anticipated since the finalization of the forgiveness applications that occurred in June.
The latest FAQs contain helpful examples to address the most common forgiveness issues faced by Borrowers. There are clarifications for a host of issues, including:
- Owner compensation for various entity types
- The timing of covered expenses, and
- FTE and salary/wage reduction calculations.
- Additionally, the SBA finally articulated what qualifies as a covered “transportation” utility cost.
With the release of these new FAQs, it’s time for Borrowers to start thinking about their loan forgiveness calculations and gathering relevant supporting documentation. One important clarification that still needs to be made relates to FTE calculations in situations where the Borrower may want to apply for forgiveness prior to the end of their covered period. Many Borrowers have indicated that their loan funds will be fully spent some time between an eight-week and twenty-four-week period. As of right now, it seems that the SBA has given the go-ahead on submitting forgiveness applications prior to the end of the Borrower’s covered period. As it relates to “early” submission, they’ve issued guidance for calculating the loss in forgiveness associated with an unresolved reduction in salaries/wages in excess of 25%, however, they’ve issued no such guidance for how Borrowers will need to calculate average FTE counts when submitting a forgiveness application prior to the end of the covered period.
As we wait for additional guidance to address early submission of forgiveness applications, Borrowers should continue to reach out to their Lender to understand Lender specific procedures for submitting forgiveness applications and supporting documentations. As always, please contact WEC’s Advisory Services Team for assistance in preparing PPP forgiveness applications or with any other PPP questions you may have.