BLS Insights

COVID-19 Update: Paycheck Protection Program Forgiveness Application Released

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Late on Friday, the SBA released the PPP Loan Forgiveness Application. Along with the Application came instructions and answers to some questions related to the calculation. Although some questions still remain and we expect additional guidance from the SBA, below are important highlights to consider when conducting the calculations.

  • Changes were made to make it easier for businesses to reach the 75% payroll requirement. The covered period can include the first payroll period paid (but not incurred) and the last payroll period incurred (but not paid) if the costs are paid on the next scheduled payroll. For example, companies on a bi-weekly payroll schedule, 5 payrolls will be included for the covered period, instead of 4.
  • Payroll will need to be calculated on an employee-by-employee basis for the FTE calculation and the wage reduction.
a) FTEs are defined as working 40 hours or more. If an employee works less than 40 hours, either count the fraction of the hours or use 0.5, whichever is better.
b) Wage reductions cannot be more than 25% and the calculations are completed on an employee-by-employee basis.
c) Owner employees are limited to $15,385 as eligible wages for forgiveness.
d) There are “safe harbors” for the above reductions by factoring in different time periods. If you meet the safe harbor, then there will not be a reduction. Note: This calculation can be complex.
  • Non-payroll costs such as mortgage interest, rent, and utilities will include amounts paid, including those in arrears. If rent is incurred during the 8 weeks and paid timely on the next scheduled due date which is after the 8 weeks, then it is included. Note: You cannot pre-pay rent if not incurred.
  • Documentation, including payroll filings, canceled checks, payment receipts, and statements will need to be submitted along with the attached application.

The PPP Loan Forgiveness Application and related calculations can be confusing. Please be sure to reach out to your BLS Team Member or email us at with any questions.

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About the Author

Kathy Dean, CPA

Tax & Small Business

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