On May 15, 2020, the Treasury Department and Small Business Administration (“SBA”) released the Paycheck Protection Program (“PPP”) Loan Forgiveness Application (“Application”), which includes long-awaited instructions for borrowers of PPP loans who intend to seek forgiveness. The application and directions can be found HERE.
A few of the key points include the following:
1. Borrowers need not match their payroll schedule to the “Covered Period” and may instead elect to use an “Alternative Payroll Covered Period,” which is the eight week period that begins on the first day of the Borrower’s first pay period following their PPP loan disbursement date.
2. Non payroll costs cannot exceed twenty-five percent (25%) of the loan forgiveness amount (e.g. mortgage obligations, rent/lease payments, utility/business payments).
3. Owner-employee compensation is capped at the lesser of either 8/52 of 2019 compensation (i.e. the owner-employee’s salary or wage for all of 2019, divided by fifty-two weeks, multiplied by eight weeks), or $15,385 (i.e. the eight-week equivalent of $100,000 per year).
For more information related to the Loan Forgiveness Application, click HERE. Hunter Business Law is continuing to review the Application and monitor any additional updates and/or guidance provided by the Treasury Department or SBA. For our Coronavirus alerts click HERE.
This Blog was written by Hunter Business Law Attorney Stephanie Boussias.
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