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August 09, 2020

Updated Guidance on PPP Loan Forgiveness - Application Released

Late last week the Small Business Administration (SBA) released the Paycheck Protection Program (PPP) Loan Forgiveness Application, which can be found HERE, to help borrowers navigate the forgiveness process.  Here are some important notes to mention:

  • Alternative Payroll Covered Period. 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 of their first pay period following their PPP Loan Disbursement Date (the “Alternative Payroll Covered Period”). Borrowers who elect to use the Alternative Payroll Covered Period must apply the Alternative Payroll Covered Period wherever there is a reference in this application to “the Covered Period or the Alternative Payroll Covered Period.” However, Borrowers must apply the Covered Period (not the Alternative Payroll Covered Period) wherever there is a reference in this application to “the Covered Period” only.  
  • Bonuses for Owners, self-employed individuals, or general partners. The new guidance states that owners, self-employed individuals and general partners at firms must record their total weekly pay, and certify that it does not exceed eight-weeks’ worth of 2019 compensation capped at $15,385 — which is the eight-week equivalent of a $100,000 annual salary. 
  • No Penalty for Employees Who Quit or Refuse to Work for FTE Headcount. An employer will not be penalized for a reduction in Full-Time Equivalents (FTEs) if:
    • Employer makes a good-faith written offer to return to work, but employee refuses;
    • Employee voluntarily quits;
    • Employee is terminated for cause; or
    • Employee voluntarily takes a reduction in hours.

Last night, NADA released its Updated Preliminary Guidance on the Use of Proceeds and Forgiveness that can be found HERE.  Additionally, Fisher Phillips has released a summary article that can be found HERE.  Dealers should also consult with their accounting professional or legal counsel for more detailed guidance.