July 23, 2020
If we select the 24-week option, our spend will significantly exceed the loan amount we received. Therefore, if we have an FTE reduction of 25%, we will still end up with a total greater than our loan. Will this be acceptable?
Posted by Armanino Financial Advisory Team
No. You cannot claim forgiveness greater than your loan amount. Forgiveness relates solely to how you spent the PPP loan proceeds, not to how much you spent in aggregate on payroll and other authorized uses in 24 weeks, regardless of source. In your situation, clearly you will have spent all the PPP funds, along with a significant portion of operating funds you held independently from the PPP funds. You can’t claim forgiveness on your use of non-PPP funds. In this example, your gross forgiveness amount would begin with the total loan amount received, against which the FTE Reduction Factor would be applied, netting you 75% forgiveness.