loan forgiveness payment protection program

SBA Releases PPP Loan Forgiveness Application – Key Takeaways

The SBA has released the much-anticipated form for businesses to apply for PPP Loan Forgiveness. The 11-page application goes a long way to resolve many of the questions and concerns businesses had anxiously wondered about loan forgiveness. At Emerald Financial Partners we are working closely with clients to help them accurately calculate and report payroll and all other qualifying expenses to ensure they will receive the full amount of loan forgiveness for which their business is entitled.

Here are just a few key points from the Loan Forgiveness application:

  • Payroll expenses do not have to be both “paid and incurred” in the exact eight-week period (56 days) that begins on the day that the loan proceeds are received. The application allows businesses to either use the 56-day period or an “Alternative Payroll Covered Period” if that better aligns with their payroll schedule.
  • The 75% rule has been clarified to say that eligible nonpayroll costs cannot exceed 25% of the total forgiveness amount. Some thought it was an all or nothing requirement.
  • Interest, rent, and utilities incurred during the eight-week period are eligible even if their regular billing date will be after the Covered Period.
  • The application explains how to calculate the reduction of what will be forgiven if you have reduced your workforce and/or compensation. The amounts forgiven for rent, interest and utilities are also reduced if there is a reduction in the number of employees.
  • Unfortunately, the application confirms that independent contractors, proprietors and partners in partnerships cannot receive forgiveness for their own health insurance and retirement plan contributions.

If you have more questions and concerns about the Loan Forgiveness application – give us a call. We’re happy to help you work through the process. It does get complicated and your business may very well depend on you getting this right!

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