Final Guidance Issued for Paycheck Protection Program

Core Financial PartnersBusiness Owners

PPP Final Guidance
Borrowers are eligible for PPP loan forgiveness for costs incurred and payments made during the covered period for the following:

  1. Payroll Costs (75% of Forgiveness Amount)
  2. Non-Payroll Costs (25% of Forgiveness Amount)
    • Interest Payment on Business Mortgage Obligations on Real or Personal Property incurred before 2/15/2020 (but not principal)
    • Rent Obligations on Real or Personal Property under Lease Agreement in force before 02/15/2020
    • Business Utility Payments for Service beginning before 02/15/2020: Electric, Gas, Water, Transportation, Telephone, Internet Access

Payroll Includes

  • Compensation to employees who are U.S. residents
  • Salary, wages, commissions
  • Cash tips or the equivalent of tips based on records of past tips or reasonable estimation
  • Vacation, parental, family, medical, sick leave
  • Allowance for separation or dismissal
  • Employee benefits: group health care coverage (premiums and retirement)
  • Payment of State and Local taxes assessed on employee compensation

Payroll Costs Eligible for Loan Forgiveness

  • Payroll costs must be incurred during the 8-consecutive week (56 days) covered period in order to be eligible for forgiveness, determined by one of the following:
    • Date of disbursement of the loan proceeds from the lender
    • 1st day of the 1st payroll cycle in the covered period
  • Salary, wages, and commission payments to furloughed employees; bonuses; and hazard pay during the covered period are eligible for loan forgiveness as long as they meet the following conditions:
    • Do not exceed an annual salary of $100,000, prorated for the covered period
    • Owner-employees and self-employed individuals’ own payroll compensation available for forgiveness can be no more than the lesser of:
      • 8/52 of their 2019 compensation
      • $15,385 per individual in total across all businesses

Non-Payroll Costs Eligible for Loan Forgiveness

  • Paid during covered period
  • Incurred during the covered period and paid on or before the next regular billing date, even if the billing date is after the covered period

*Remember there is a 25% cap on non-payroll costs
*Advance payments of interest on mortgage obligations are NOT eligible
*Principal on mortgage obligations is not eligible under any circumstances

Reductions to Loan Forgiveness Amount

A borrower’s loan forgiveness amount will not be reduced if the borrower laid-off or reduced the hours of an employee, then offered to rehire the same employee for the same salary and same number of hours, or restored reduction in hours, but the employee declined the offer during the covered period.

*The borrower must maintain records documenting the offer and its rejection
*The borrower must inform the applicable State unemployment insurance office of such employee’s rejected offer of reemployment within 30 days of the employee’s rejection of the offer.

Determining the Amount of Loan Forgiveness Reduction

Choose one of the following reference periods (not later than 6/30/2020)
  1. 02/15/2019 – 06/30/2019
  2. 01/01/2020 – 02/29/2020
  3. Consecutive 12-week period between 05/01/2019 – 09/15/2019
If the average number of Full-Time Equivalent (FTE, defined by 40-hour week average) employees during the covered period is less than during the reference period, total eligible expenses available for forgiveness is reduced proportionally by the percent reduction in FTE employees. (E.g. 10 FTE Employees during the reference period, 8 FTE Employees during covered period = 80% of the funds are available for forgiveness)