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PPP Loan Forgiveness Resources

While funds are currently available for Paycheck Protection Program (PPP) loans, some business owners are hesitant to apply because they are uncertain whether the loan will be forgiven. Businesses owners and self-employed individuals can use the following recently released resources to determine whether and how much of a PPP loan will be forgiven:

 – A loan forgiveness calculator from the the American Institute of CPAs (AICPA) and
 – The loan forgiveness application published by the SBA and U.S. Treasury Department.

The U.S. Treasury PPP FAQ has specified that PPP loans will be forgiven if:

 – The borrower does not “use the loan amount for anything other than payroll costs, mortgage interest, rent, and utilities payments over the 8 weeks after getting the loan”; 
 – Not more than 25% of the loan is applied towards non-payroll costs; 
 – Full-time equivalent (FTE) employee headcount is maintained;
 – Salaries and wages are not decreased by more than 25% for any employee that made less than $100,000 annualized in 2019.

Businesses were given until June 30, 2020, to restore their full-time employment and salary levels for any changes made between February 15, 2020, and April 26, 2020.

Based on “existing PPP guidance from the Treasury and SBA, as well as additional recommendations from the AICPA,” the AICPA loan forgiveness calculator uses three categories of information to calculate loan forgiveness: 1) non-payroll expense tracking; 2) full-time job equivalent reduction over the 8-week period; and 3) payroll accumulator to capture eligible payroll costs and whether wages on a per employee basis declined in the 8-week period.

The loan forgiveness application clarifies a few notable items:

 – The following will not be counted as reductions in FTE employees: (1) any positions for which the borrower made a good-faith written offer to rehire an employee that was rejected by the employee; and (2) any employees who were fired for cause, voluntarily resigned, or voluntarily requested and received a reduction of their hours. However, businesses can only include these full-time equivalents once, i.e. if the position was not filled by a new employee.
 – For purposes of calculating average FTE employees per month, seasonal businesses can choose a third reference period of any 12-week period between May 1, 2019 and September 15, 2019, in addition to the other two reference periods available to all businesses of February 15, 2019 to June 30, 2019 or January 1, 2020 to February 29, 2020. 
 – An employee is considered full time if he or she has worked at least 40 hours a week.

Note that the information we have provided is not legal advice and may change quickly given the dynamic environment. For questions specific to your business, it’s advisable to consult with an accountant or lawyer. For tips on managing your business during COVID-19, check out other webinars and content from our Houzz Pro Resilience Initiative here.

Please email if you have additional topics on which you would like more information.

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