Friday, May 15, 2020
By COVID-19 Response Team
The following was released earlier this evening. We are still analyzing, but here are critical components of the summary of costs eligible for forgiveness:
Incurred and paid
- Paid = considered paid on date payroll checks are distributed
- Incurred = Day the employee’s pay is earned
- Payroll costs incurred but not paid during the borrower’s last pay period of the Covered Period (56 days) are eligible for forgiveness if paid on or before the next regular payroll date.
Eligible non-payroll costs (Agreements must be in force before February 15, 2020)
- Must be paid during Covered Period or incurred during Covered Period and paid on or before the next regular billing date, even if the billing date is after the Covered Period.
- Covered mortgage obligation interest includes any business mortgage obligation on real or personal property
- Covered rent includes business rent or lease payments for real or personal property
- Covered utilities includes electricity, gas, water, transportation, telephone or internet access
Individual employee payroll costs eligible for forgiveness cannot exceed annual salary of $100,000.
SBA will also soon issue regulations and guidance to further assist borrowers as they complete their applications, and to provide lenders with guidance on their responsibilities. See the latest release below from the U.S. Treasury Department.
U.S. Treasury Department
Office of Public Affairs
Press Release: May 15, 2020
Contact: Treasury Public Affairs, (202) 622-2960
SBA and Treasury Release Paycheck Protection Program Loan Forgiveness Application
WASHINGTON—Today, the Small Business Administration (SBA), in consultation with the Department of the Treasury, released the Paycheck Protection Program (PPP) Loan Forgiveness Application and detailed instructions for the application.
The form and instructions inform borrowers how to apply for forgiveness of their PPP loans, consistent with the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). SBA will also soon issue regulations and guidance to further assist borrowers as they complete their applications, and to provide lenders with guidance on their responsibilities.
The form and instructions include several measures to reduce compliance burdens and simplify the process for borrowers, including:
- Options for borrowers to calculate payroll costs using an “alternative payroll covered period” that aligns with borrowers’ regular payroll cycles
- Flexibility to include eligible payroll and non-payroll expenses paid or incurred during the eight-week period after receiving their PPP loan
- Step-by-step instructions on how to perform the calculations required by the CARES Act to confirm eligibility for loan forgiveness
- Borrower-friendly implementation of statutory exemptions from loan forgiveness reduction based on rehiring by June 30
- Addition of a new exemption from the loan forgiveness reduction for borrowers who have made a good-faith, written offer to rehire workers that was declined
The PPP was created by the CARES Act to provide forgivable loans to eligible small businesses to keep American workers on the payroll during the COVID-19 pandemic. The documents released today will help small businesses seek forgiveness at the conclusion of the eight week covered period, which begins with the disbursement of their loans.
Click here to view the application and instructions.
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