Eligible Payroll Costs

• Payroll costs PAID and INCURRED during the 8-week (56-day) (“Covered Period”) period beginning with on the date the loan was received.

INCURRED – Payroll costs are considered incurred on the day the employee’s pay is earned

PAID – Payroll costs are considered PAID on the day that paychecks are distributed or the Borrower originates an ACH Credit Transaction

IMPORTANT:  Payroll costs incurred, but not paid during the borrower’s last pay period of the “Covered Period” are eligible for forgiveness IF PAID on or before the next regular payroll date.  Count payroll costs that were paid and incurred only once.=

• Alternate Payroll Covered Period - For administrative convenience, Borrowers with a biweekly (or more frequent) payroll schedule may elect to calculate eligible payroll costs using the eight-week (56-day) period that begins on the first day of their first pay period following their PPP Loan Disbursement Date (the “Alternative Payroll Covered Period”).

• For example, if the Borrower received its PPP loan proceeds on Monday, April 20, and the first day of its first pay period following its PPP loan disbursement is Sunday, April 26, the first day of the Alternative Payroll Covered Period is April 26 and the last day of the Alternative Payroll Covered Period is Saturday, June 20

• Borrowers who elect to use the Alternative Payroll Covered Period must apply the Alternative Payroll Covered Period wherever there is a reference in this application to “the Covered Period or the Alternative Payroll Covered Period.” However, Borrowers must apply the Covered Period (not the Alternative Payroll Covered Period) wherever there is a reference in this application to “the Covered Period” only.

INCLUDED PAYROLL COSTS

• Cash Compensation: Enter the sum of gross salary, gross wages, gross tips, gross commissions, paid leave (vacation, family, medical or sick leave, not including leave covered by the Families First Coronavirus Response Act), and allowances for dismissal or separation paid or incurred during the Covered/Alternative Payroll Period.

For each individual employee, the total amount of cash compensation eligible for forgiveness may not exceed an annual salary of $100,000, as prorated for the Covered/Alternate Period

• Employee Health Insurance – Total amount paid during Covered/Alternate Covered period

• Only the amount of employer Any contributions by employees will already be included in cash compensation.

• Employee Retirement Plans– Total amount paid during Covered/Alternate Covered period

• Only the amount of employer Any contributions by employees will already be included in cash compensation

• Employer State and Local Taxes Assessed on Employee Compensation– Total amount paid during Covered/Alternate Covered period
• Only the amount of employer Any contributions by employees will already be included in cash compensation.

• Owner-Employees/Self-Employed/General Partners: This needs to be separated from all other employees and disclosed on the forgiveness application
• Salary/Hourly Wage Reduction – Calculations are needed if this has occurred.

Eligible Non-Payroll Costs

 a. Covered Mortgage Obligations – payments of interest (not including any prepayment or payment of principal) on any mortgage obligation on real or personal property incurred BEFORE 2/15/2020

 b. Covered Rent Obligations: business rent or lease payments pursuant to lease agreements for real or personal property in force before February 15, 2020 (“business rent or lease payments”); and

 c. Covered Utility Payments: business payments for a service for the distribution

1. Electricity,
2. Gas,
3. Water,
4. Transportation,
5. Telephone, or
6. Internet access for which service began before February 15, 2020 (“business utility payments”).

Important:  An eligible non payroll cost must be paid during the Covered Period OR 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.

Count non payroll costs that were both paid and incurred only once.

Important:  Eligible non payroll costs cannot exceed 25% of the total forgiveness amount.

FTE CALCULATIONS

IMPORTANT DATES to PERFORM CALCULATIONS

1. Feb 15, 2019 through Jun 30, 2019
2. January 1, 2020 through Feb 29, 2020
3. Any consecutive 12-week period between May 1, 2019 and Sept 15, 2019 (if seasonal).
4. Covered (Or Alternate) Period

AVERAGE FTE CALCULATION: This calculates the average full-time equivalency (FTE) during the Covered Period or the Alternative Payroll Covered Period. For each employee, enter the average number of hours paid per week, divide by 40, and round the total to the nearest tenth. The maximum for each employee is capped at 1.0.

A simplified method that assigns a 1.0 for employees who work 40 hours or more per week and 0.5 for employees who work fewer hours may be used at the election of the Borrower.

This calculation will be used to determine whether the Borrower’s loan forgiveness amount must be reduced due to a statutory requirement concerning reductions in full-time equivalent employees.

FTE Reduction Exceptions: Determine the FTE of (1) any positions for which the Borrower made a good-faith, written offer to rehire an employee during the Covered Period or the Alternative Payroll Covered Period which was rejected by the employee; and (2) any employees who during the Covered Period or the Alternative Payroll Covered Period (a) were fired for cause, (b) voluntarily resigned, or (c) voluntarily requested and received a reduction of their hours. In all of these cases, include these FTEs on this line only if the position was not filled by a new employee.

Any FTE reductions in these cases do not reduce the Borrower’s loan forgiveness.

FTE Reduction Safe Harbor

A safe harbor under applicable law and regulation exempts certain borrowers from the loan forgiveness reduction based on FTE employee levels. Specifically, the Borrower is exempt from the reduction in loan forgiveness based on FTE employees described above if both of the following conditions are met:

(1) the Borrower reduced its FTE employee levels in the period beginning February 15, 2020, and ending April 26, 2020; and

(2) the Borrower then restored its FTE employee levels by not later than June 30, 2020 to its FTE employee levels in the Borrower’s pay period that included February 15, 2020.

DOCUMENATION REQUIREMENTS

REQUIRED FOR SUBMISSION

Payroll:

Documentation verifying the eligible cash compensation and non-cash benefit payments from the Covered Period or the Alternative Payroll Covered Period consisting of each of the following:

 A. Bank account statements or third-party payroll service provider reports documenting the amount of cash compensation paid to employees.

 B. Tax forms (or equivalent third-party payroll service provider reports) for the periods that overlap with the Covered Period or the Alternative Payroll Covered Period:

     i. Payroll tax filings reported, or that will be reported, to the IRS (typically, Form 941); and

     ii. State quarterly business and individual employee wage reporting and unemployment insurance tax filings           reported, or that will be reported, to the relevant state.

     iii.   Payment receipts, cancelled checks, or account statements documenting the amount of any employer             contributions to employee health insurance and retirement plans that the Borrower included in the forgiveness       amount.

Nonpayroll:

Documentation verifying existence of the obligations/services prior to February 15, 2020 and eligible payments from the Covered Period.

 A. Business mortgage interest payments: Copy of lender amortization schedule and receipts or cancelled checks verifying eligible payments from the Covered Period; or lender account statements from February 2020 and the months of the Covered Period through one month after the end of the Covered Period verifying interest amounts and eligible payments.

B. Business rent or lease payments: Copy of current lease agreement and receipts or cancelled checks verifying eligible payments from the Covered Period; or lessor account statements from February 2020 and from the Covered Period through one month after the end of the Covered Period verifying eligible payments.

C.Business utility payments: Copy of invoices from February 2020 and those paid during the Covered Period and receipts, cancelled checks, or account statements verifying those eligible payments.

FTE:

Documentation showing (at the election of the Borrower):

1.the average number of FTE employees on payroll per month employed by the Borrower between February 15, 2019 and June 30, 2019;

2.the average number of FTE employees on payroll per month employed by the Borrower between January 1, 2020 and February 29, 2020; or 

3.in the case of a seasonal employer, the average number of FTE employees on payroll per month employed by the Borrower between February 15, 2019 and June 30, 2019; between January 1, 2020 and February 29, 2020; or any consecutive twelve-week period between May 1, 2019 and September 15, 2019.

The selected time period must be the same time period selected for purposes of completing PPP Schedule A, line 11.

Documents may include payroll tax filings reported, or that will be reported, to the IRS (typically, Form 941) and state quarterly business and individual employee wage reporting and unemployment insurance tax filings reported, or that will be reported, to the relevant state.

Documents submitted may cover periods longer than the specific time period.

MAINTAIN by NOT REQUIRED TO BE SUBMITTED

A. Documentation supporting the listing of each individual employee in PPP Schedule A Worksheet Table 1, including the “Salary/Hourly Wage Reduction” calculation, if necessary.

B. Documentation supporting the listing of each individual employee in PPP Schedule A Worksheet Table 2; specifically, that each listed employee received during any single pay period in 2019 compensation at an annualized rate of more than $100,000.

C. Documentation regarding any employee job offers and refusals, firings for cause, voluntary resignations, and written requests by any employee for reductions in work schedule.

D. Documentation supporting the PPP Schedule A Worksheet “FTE Reduction Safe Harbor.”

E. All records relating to the Borrower’s PPP loan, including

            a.Documentation submitted with its PPP loan application,

            b.Documentation supporting the Borrower’s certifications as to the necessity of the loan request and its eligibility for a PPP loan,

            c.Documentation necessary to support the Borrower’s loan forgiveness application, and

            d.Documentation demonstrating the Borrower’s material compliance with PPP requirements.

Important:  The Borrower must retain all such documentation in its files for six years after the date the loan is forgiven or repaid in full, and permit authorized representatives of SBA, including representatives of its Office of Inspector General, to access such files upon request.