Payroll Protection Program Forgiveness

April 23, 2020 by Melissa Clary  

Were you one of the lucky companies who received PPP funds?  If you want to have those funds forgiven you are required to spend those funds over the next 8 weeks on employee and office costs. Below is the required guidelines:
25% spend on utilities (including telephone and internet), rent and commercial mortgage interest
75% spend on employee costs – it is advisable to increase your pay cycle to make sure you are maxing out these costs.  Consider moving payroll dates to maximize payroll paid during that 8 week period.
• Gross wages (wages over $100k per annum are excluded)
• Can include PTO leave pay, just not the FFCRA pay
• State unemployment premiums
• Employer costs for employee’s health insurance
• Employer retirement matches
Your loan forgiveness will be reduced if you decrease your Full-Time Equivalent (FTE) headcount, remember the purpose of the loan is to keep employees on payroll.  You can rehire laid off employees that were let go in the months of February 15th - April 27th, 2020, to increase your full-time number.  If an employer reduces employees from February 15th through April 27, 2020, but restores that FTE count by June 30, 2020, the reduced forgiveness is restored.
Your loan forgiveness will also be reduced if you decrease salaries and wages by more than 25% for any employee that made less than $100,000 annualized in 2019 during the eight-week loan period compared to the pre-loan baseline wages and salary. The baseline is the total salary and wages earned by the employee during the last completed calendar quarter before the loan period (i.e., first quarter 2020).
It’s advisable to utilize a payroll specialist to work alongside your trusted advisors, CPA/attorney and bank to help make sure you get the maximum amount of PPP funds forgiven.