Financial Advisory Blog

Armanino’s Financial Advisory blog is your source for thought leadership around cloud ERP and accounting solutions and integrations. Supported by the Cloud Accounting Institute and numerous experts in cloud, finance, reporting, integration, compliance, and technology, Armanino’s Financial Advisory blog features must-read content on what’s happening in the finance industry, case studies, white papers, and much more.

June 17, 2020

SBA Issues New PPP Forgiveness Instructions

Posted by COVID-19 Rapid Response Team

Today, SBA and the Treasury Department released new guidance and application forms for PPP loan forgiveness. Fortunately, they cleared up a few big questions people have:

  • Maximum total compensation if electing 24 weeks is now $46,154 (24/52 * $100,000)
  • The safe harbor restoration date is now theearlier of the date the forgiveness application is submitted or December 31, 2020 for both reduction factors
  • There is no provision for selecting a Covered Period between 8 and 24 weeks; it’s one or the other

Other important changes:

  1. Introduced an EZ form, to be used only by borrowers with any of the following:
    • No employees included in their original loan application
    • No salary reductions >25% (same calculation as originally instructed) AND no reductions in number of employees (not FTEs) or in average paid hours of employees from 1/1/20-End of Covered Period (this is a brand new calculation and no guidance is given on the comparison period for the “average paid hours” test nor for what constitutes a reduction; for instance, if one employee is paid for only 38 hours in one pay period, is that a reduction?)
    • No salary reductions >25% AND they were unable to restore to the 2/15/20 level of business activity solely due to requirements set by HHS, CDCP or OSHA – note that state, county or city requirements do not meet this test
  2. In the EZ application, they now allow retirement insurance contributions on behalf of owner-employees “capped at 2.5 months’ worth of the 2019 contribution amount.” But in the main application, they do not indicate this is allowable or limited if allowable.

We anticipate that the majority of borrowers using the EZ form will be the ones who meet test 1a above. Many businesses will struggle with the “average paid hours” issue in test 1b, and we expect few will be impacted by test 1c all the way through the end of the year.

You can find more information in our detailed PPP FAQs.

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