PPP Forgiveness Questions & Answers


(Photo | Pexels)

There are many questions surrounding the forgiveness part of the Paycheck Protection Program loan program. It’s important to note that the SBA has not yet provided full guidance about forgiveness and what the process will look like. Below are some commonly asked questions and answers, provided by Columbia Bank.

If your client has a specific question that is not covered below, you should direct them to the SBA District Office covering their location for assistance. It is important that you do not provide them with incorrect information.

Will employee headcount be a factor at forgiveness?

Yes, the SBA wants to see that businesses have returned to pre-disaster levels of staffing with allowance for some attrition. Full-time equivalent staff will be the metric used, and a business is expected to return to the same level of staffing they were at over the time period used to calculate the average monthly payroll. Some attrition, up to 25 percent, is allowed, but we currently do not have full guidance on how SBA will prorate forgiveness if staffing attrition goes above this. Please refer your client to their SBA District Office for further details.  

For a home-based business, can utilities count toward forgiveness if they are entitled to a business deduction for it?

Yes, as long as they stay within the 25 percent allowed for non-payroll costs, utilities allocated to the business use of the home can be included. The same percentage used on Schedule C to calculate the use of home deduction should be used to allocate what part of the total utility bill is for the business.

Can I pay for things due outside of the eight-week period? 

Current guidance is that you have to use the money during the eight weeks, but there are no exclusion rules tied to the due date of the obligation being paid. For instance, guidance now indicates rent due July 1 could be paid with PPP money even if the eight weeks ended June 20 so long as the check for the July 1 rent was cut on or before June 20. 

If I don’t use all the money, what do I do with the amount leftover?

Any funds not used by the end of the eight weeks can simply be repaid to the loan and forgiveness will be looked at based upon the amount used.

Some businesses aren’t allowed to open yet — is SBA going to adjust the June 30, 2020 date by which staffing needs to return to pre-disaster levels or the eight weeks businesses have to use the funds due to this?

No, the SBA has not provided any indication that this date or the eight weeks will be adjusted at this time.

My PPP funded yesterday — I had made my rent payment last week — can I use PPP funds to reimburse myself?

No, use of PPP funds cannot be to reimburse the business even if the expense is eligible for forgiveness.

What if some of my employees don’t want to return to work — will I be penalized at forgiveness due to this?

So long as you make a formal offer in writing of employment — if the employee declines the offer, the business will not be penalized.

Will I have to provide documentation at forgiveness? 

Yes, all documentation for the funds used during the eight weeks should be maintained by the business, including payroll reports and cancelled checks for rent/utilities. The SBA will be providing further details on any other required forms or documentation to submit.

Where can I find more information, or who should I talk with to get my specific questions answered?

Other frequently asked questions and answers are found on the SBA’s website on the Paycheck Protection Program page: sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program or on the SBA FAQ for Lenders and Borrowers: sba.gov/document/support–faq-lenders-borrowers.




About Author


Leave A Reply