SBA Releases Payroll Protection Program Loan Forgiveness Application
On Friday May 15th the U.S. Small Business Administration (SBA) published the application and related instructions to request forgiveness for the Payroll Protection Program (PPP) loan. Small business owners and advisors have been anxiously awaiting guidance on the forgiveness terms since the PPP was announced in March. There will likely be additional guidance and information that will be provided in the coming weeks.
PPP Forgiveness Clarifications and Changes
- The Covered Period of 8 weeks is defined as a 56-day period from the date PPP loan was received by the borrower (the PPP Loan Disbursement date)
- To avoid payroll date discrepancies within the Covered Period, an Alternative Payroll Covered Period beginning on the first day of the first pay period following the PPP loan disbursement date can be specified. *This Alternative Payroll Covered Period is applicable only for payroll related costs.
- For each individual employee, the total amount of cash compensation eligible for forgiveness may not exceed an annual salary of $100,000, as prorated for the Covered Period or Alternative Period – not to exceed $15,385
- Eligible non-payroll costs (covered mortgage obligations, covered rent obligations, or covered utility obligations) do not have a mechanism for an alternative date of payment. Borrowers should measure non-payroll costs incurred and paid in the 8-week period and strive to have two months’ worth of eligible expenses paid in the covered period. Pre-payments of obligations are not allowable as any costs must also be incurred in the Covered Period.
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