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Paycheck Protection Program 302:How Nonprofits Can Navigate the Forgiveness Process & Application

With Updates as of July 2, 2020Continue to Check SBA’s Website

This information is provided for general informational and educational purposes only and does not constitute legal, accounting or financial advice. Please note guidance is changing regularly. We encourage you to check with the SBA and your lender for updated guidance and check our FMA toolkit for updated materials.

Introduction to Audited What are we covering today?

1) What should we expect from the Application and the process?

2) What are the differences between the standard application and EZ form?

3) What do we need to Collect, Calculate, and Complete for each section of the application?

Introduction to Audited Background – Check out Managing Your Loan Guidance

1) Details of Eligible Expenses for Forgiveness

2) Details of Expense Timing

(Paid and Incurred)

3) Covered Period Definitions and 8 vs. 24 Weeks

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Introduction to Audited Financial Statements

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One of our experts will assist you with your questions as soon as possible

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What should we expect from the Application and the process?

We’re Going to Help You Get Here:

Work Most People Will Need to Do to Complete The Application. We’ll walk through all of this today.

Share basic information about your loan

Calculate and compare how many employees (as FTEs) you had as of January 1, 2020 and the end of your forgiveness period (aka Covered Period) and possibly some other dates

Share how much in allowable expenses (payroll and non-payroll) you had during your Covered Period

Calculate any potential reductions in forgiveness and if a safe harbor from reductions applies

Conduct final calculations to determine your forgiveness amount

Review and sign off on a list of Certifications

Provide or maintain backup documentation justifying all of the expenses you’re including

Choices You’ll Need to Make During Your Application Journey – Be Prepared

Covered PeriodStarts on the Date of Loan Disbursement

Alternative Covered PeriodOnly for Payroll Expenses. Starts

on the Date of Your First Bi-Weekly or More Frequent Payroll

After Loan Disbursement.

8-Week Period 24-Week Period

Standard FTE CalculationHours Paid Per Week / 40

Simplified FTE Method≥ 40 Hours = 1 FTE< 40 hours = .5 FTE

FTE Comparison Period Option 12/15/2019 – 6/30/2019

FTE Comparison Period Option 21/1/20 – 2/29/2020

OR

OR

OR

ORAlso a third optional for seasonal

employers

When is the Period for Forgiveness?

The primary purpose of the loan is to use it on allowable expenses during the Covered Period: the 8 or 24 weeks following when you received it. The allowable spending you have during this 8 or 24 weeks is what will count for forgiveness.

How To Define the Period: 8 Weeks aka 56 Days or 24 Weeks aka 168 Days

The Covered Period starts with the loan disbursement date.

However, for administrative convenience, organizations can calculate eligible payroll costs using an Alternative Payroll Covered Period if they are on a bi-weekly or more frequent schedule, delaying the start of their 8 or 24-week

period to the first day of their first payroll following when the loan was disbursed. This is not an option for semi-monthly or monthly payrolls.

Learn More:

What are the steps for getting forgiveness?

Sample Process You Might See After Your Forgiveness Period Ends.

You Have Up to 10 Months to Submit Your Application:

Submit Forgiveness

Application & Documents to Your Lender

Gather Documents &

Complete Application

(May Be Online Portal)

Lender Has 60 Days to

Send to SBA and SBA Reviews

SBA Has 90 Days to

Review & Lender

Notifies You of Result

Lender Verifies Info & May Have Questions

While you can apply before your Covered Period ends, we are still awaiting more guidance on how this would affect any FTE reduction penalties.

Where Are Some Areas We Awaiting More Guidance?

How will being able to apply some time between 8 and 24 weeks affect FTE calculations? How will the simplified method of calculating FTE interact with the 24-weeks especially if organizations have to make reductions during the 24-week period?

How might the safe harbor for experiencing reductions in business activity as a result of health directives related to COVID-19 apply to nonprofits?

What will online application forms and documentation requirements from lenders look like? What kinds of reports will payroll companies create to make this easier for you?

Let’s Dig Into the Applications: Two Options

Each has an accompanying set of instructions.

Take a breath. You’ve probably filled out more cumbersome grant applications. Or your own taxes. We’re here to break it all down.

Standard Application Form EZ

https://home.treasury.gov/policy-issues/cares/assistance-for-small-businesses

https://home.treasury.gov/policy-issues/cares/assistance-for-small-businesses

Can I Use Form EZ?

Wage Reduction CheckYou did not reduce the annual salary or hourly wage of any employee* by more than 25% during the Covered Period (8 or 24 weeks) compared to

the period between 1/1/20 and 3/31/20? (*This applies to any employees who made than less than $100k

annualized on each paycheck in 2019)

The forms ask for similar information and you may not notice a major difference if your lender is using an online portal. But so you’re aware:

You can use Form EZ If You Meet A and either B or C:

Workforce Reduction CheckDid you reduce the number of employees or

average paid hours of employees between 1/1/20 and as of the end of the Covered Period?

(Ignore reductions that arose from the following when comparing: Inability to rehire similarly qualified employees; employees requested a

reduction in hours; firings for cause; or voluntary terminations)

A

B OrHealth & Safety Compliance

Check Did you experience reductions in “business activity” compared to prior 2/15 levels as a result of

complying with health directives related to COVID-19 (e.g., social

distancing, sanitation, etc.)?

C

What do we need to Collect, Calculate, and Complete for each

section of the application?

Ultimately Here’s What You Need to Calculate

Maximum Amount Eligible for

Forgiveness

Less Penalties

Forgiveness Amount

60% on Payroll Check

What Core Documents Do You Need to Collect First?

Payroll reports overlapping with your covered period (paid and incurred) listed by each employee showing cash compensation and employer paid state/local taxes.

Reports or statements showing employer paid benefits showing health insurance as well as retirement (both excluding employee contributions)

Three reports listed by employee showing FTE count or number of hours worked per week (i) as of January 1, 2020; during your covered period; (ii) between 2/15/19 – 6/30/19; (iii) between 1/1/20 – 2/29/20. If you already know if (ii) or (iii) will show lower FTEs, just grab the lower one. For exempt employees, you will need to understand the standard number of hours they are paid for (e.g., 40, 32)

List of rent, lease payments for real or personal property and mortgage interest paymentsfrom arrangements in place before 2/15/20 that were paid or incurred during the covered period

List of utility payments paid and payments incurred during the covered period (electricity, gas, water, transportation, telephone, and internet access in service before 2/15/20)

Check if your Payroll Company has created customized reports for you on PPP Forgiveness

What Other Documents Might You Need to Get Started?

Did you experience a staff reduction from 2/15/20 – 4/26/20 and then fully recover your

FTE count by not later than 12/31/20?

Gather payroll or time tracking reports to understand the FTE count/# of hours worked per employee for

2/15/20 – 4/26/20 As of 2/15/20

As of the Period you got your FTE count back up to 2/15/20 levels

Did you reduce salary level or hourly rates

in 2020?

Gather the changes in those rates throughout 2020,

starting 1/1/20

Will it be clear from other reports gathered who made

≤$100k annualized for all pay periods in 2019?

Gather a list of salaries as of 1/1/2019

Let’s Start with Payroll Costs

Cash Compensation1

Employer Paid Health

Insurance (Medical,

Dental, Vision)

Employer Paid State

& Local Payroll Taxes

1Cash compensation includes salaries, wages and commissions (including to furloughed employees), tips, bonuses, hazard pay, paid leave, severance, and housing allowances. Cash compensation eligible for forgiveness is limited to $15,385 per employee is using an 8-week covered period or $46,154 if using a 24-week period.

During the 8 Week or 24 Weeks, Add Up What Was Paid and Incurred:

+Employer

Paid Retirement

Benefits

+ +

Payroll costs incurred but not paid during the Borrower’s last pay period of the Covered Period (or Alternative Payroll Covered Period) are eligible for forgiveness if paid on or before the next regular payroll date.

Learn More:

Check if your Payroll Company has created customized reports for you on PPP Forgiveness

Next, Let’s Calculate Non-Payroll Costs

Line 2. Business Mortgage Interest

Payments

Line 3. Business Rent or Lease

Payments

Line 4. Business Utility Payments

Mortgage Interest Paid on Real or Personal Property on Obligations In Place by 2/15/20

+ Prorating the amount Incurred but not Paid

Rent or Lease Payments Paid on Real or Personal Property from Arrangements In Force by 2/15/20


Electricity + Gas + Water + Transportation + Telephone + Internet Paid from Services that Began by 2/15/20


An eligible nonpayroll 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.


Learn More:

Now onto the first potential penalty: Salary Reduction

Of (a) new employees who started in 2020 or

(b) the employees with avg. annualized salaries of $100k or less during all pay periods in 2019

Who were paid during the Covered Period

Did you reduce any of their salaries/hourly rates by more than 25% (e.g., $90k salary to $45k salary or $21/hr to $14/hr –

just the rate, not hours of work)

During the Covered Periodas compared to their salary or hourly rate between

Jan 1, 2020 – March 31, 2020

Learn More:

Here’s What The Reduction is Trying

to Get At:

If so, there’s some math to do to figure out first if you qualify for a Safe Harbor for restoring their salary.

If you don’t qualify for the Safe Harbor, you need to calculate how much cash compensation above 25% each applicable person loss as a result.

Now onto the first potential penalty: Salary Reduction Learn More:

Name Start Date

End Date

Avg. Salary During 2019

Avg. Salary

1/1/20 –3/31/20

Salary Reduced 2/15/20 –4/26/20?

Avg. Salary in Covered

Period

Salary at 12/31/20

Salary Reduction

Result

Robin 8/1/18 N/A $75,000 $78,000 No $78,000 $78,000 None

Jill 5/1/16 N/A $130,000 $130,000 Yes $90,000 $90,000 None (2019 Salary >

$100k)

Zara 5/1/16 N/A $25/hr $25/hr Yes $15/hr $25/hr None (Salary Restored)

Antoni 2/1/20 N/A N/A $120,000 No $75,000 $75,000 $15,000 (Started in 2020)

Sally 8/1/18 6/1/20 $20/hr $20/hr Yes $14/hr N/A $160 (Assumes 20

hr/week)

Total Salary Reduction Penalty $15,160

ExamplesThere are tables in the application you can choose to use. You don’t have to use them

though. You just need have the data somewhere to back up your calculations.

Check Out the Appendix for More Details on How to Calculate or on Page 4 + 5 of SBA Application Instructions Document

Now onto the other potential penalty: FTE Reduction Learn More:

Step 1

Here’s What The Reduction is Trying

to Get At:

By what %, if any, did you reduce FTEs between your Covered Period and either 2/15/19 – 6/30/19 or

1/1/20 – 2/29/20 or if you’re a seasonal employer, a 12-week period between 5/1/19 – 8/15/19?

See if the Safe Harbor on Reduction in Business Activity Due to Health Directives Applies to You

Step 2

Step 3

Calculate Total Average FTEs During Your Covered Period

Calculate Your FTEs as of Jan 1, 2020 + End of Your Covered Period. If there was a reduction, continue…

Step 4 If your reduction happened between 2/15/20 – 4/26/20 and you restored your FTEs by 12/31/20, show this math.

Step 5 Otherwise, calculate your FTE count in one of the comparison periods

Step 6 Divide the Result in Step 1 by the Result in Step 5 to get the FTE Reduction Quotient

How do I calculate Average FTE?

Your goal is add up the number of employees as FTEs you had during your Covered Period (e.g., 7 FTEs). Specifically, what is the sum of each of your employee’s average weekly FTE over the Covered Period, rounding to the

nearest tenth? You’ll get to factor in some exceptions.

Two Ways to Calculate

Mathematical Method1 FTE = 40 hours/week

Example: Someone who is paid for 16 hours/week = .4 FTE

Simple MethodAnyone who is paid for 40

hours/week or more = 1 FTE

Anyone who has fewer hours = .5 FTE

If you have a lot of part-time employees or a lot of changes in hours during 2020, probably easiest to use Simple Method.

What exemptions might increase my Average FTE?

Did you make a good-faith written offer to rehire an employee during the Covered Period and it was rejected?

Was an employee fired for cause during the Covered Period? Did someone voluntarily resign or request and receive a reduction of their hours

during the Covered Period? Did you make a good-faith effort to rehire for a spot of someone who was an employee

on 2/15/20 had but you couldn’t find a similarly qualified employee by 12/31/20?

The rules try to take into account that certain things may have happened with your employees. You get to add back in for lost

FTEs for the following reasons:

Examples:

Jill was a full-time employee working 40 hours per week. She quit halfway through your covered period. You can still count her as 1 FTE for the full covered period.

Roderick was a full-time employee working 40 hours per week. They asked to go down to 20 hours per week for part of the Covered Period. You can still count them as 1 FTE for the full covered period.

How do I calculate Average FTE?

Employee Average Hours Paid Per Week During Covered

Period

Any Exemptions Kick In?

Average FTE(Mathematical)

Average FTE (Simplified)

Alice 30

Was at 30 hours and then fired for cause the second

week of the Covered Period

.8

(Keep at expected level as if the firing hadn’t happened)

.5

Jackson 40 No 1.0 1

Dianne 20

Requested Hours Be Reduced from 30 to 10 halfway through the Covered Period

0.8

(Keep at expected level as if the

reduction hadn’t happened)

.5

Rami 28 No 0.7 .5

Average FTE 3.3 2.5

What are the opportunities to bypass the FTE Reduction Calculation (aka Penalty)?

Three Opportunities to Bypass the FTE Reduction Calculation (aka Penalty). Meet One to Bypass:

You did not reduce the number of employees or average paid hours of your employees between Jan 1, 2020 and the End Of Your Covered Period

You were unable to operate between 2/15/20 and the End of Your Covered Period at the Same “Level of Business Activity” as before 2/15/20 due to compliance with health directives related to COVID-19 (e.g., social distancing, sanitation, or other customer safety requirement)

You restored any reductions from 2/15/20 – 4/26/20 to their 2/15/20 levels by the no later than 12/31/20. You will know this based on completing the FTE Reduction Safe Harbor calculations in the Application.

How do I compare my FTE count to another period?

Choose a Comparison Period

Choose the period with the lower FTE count

Feb 15, 2019–June 30, 2019

January 1, 2020 –Feb 29, 2020

Seasonal can also choose to use any consecutive 12-week period

between 5/1/19 – 9/15/19

OR

Employee Average Hours Paid Per Week During

2/15/19 – 6/30/19FTE

Joanne 30 0.8

Jackson 40 1.0

Robert 40 1.0

Dianne 16 0.4

Rami 30 0.8

Average FTE during Borrower’s chosen reference period 4.0

1 2 Calculate the Average FTE from the Comparison Period

Use the same methodology (mathematical or simple) you used to calculate Average FTE earlier

How do I finish getting to the FTE Reduction Quotient?

Sample from PPP Schedule A

Average # of FTEs Per Week During Covered Period ________

Average # of FTEs Per Week in Comparison Period

FTE Reduction Quotient:

Almost Done → Bring it All Together

If you are choosing to reduce your Forgiveness Amount, e.g., because you’re avoiding double dipping or have expenses associated with a (c)(4) or other ineligible nonprofit, it is likely you would then reduce from Line 11.

Trying to calculate before then could lead to unnecessary miscalculations and penalties.

$44,385

Finish Line→ Certifications + Signature

Some highlights of what you will need to certify:

Your organization used it for allowable purposes

You factored in any workforce or wage reduction penalties

You were careful about your forgiveness calculations and submitted all proper backup. (This burden is primarily with you more than your lender)

If you knowingly use the funds for other purposes or mispresent the forgiveness amounts, this could lead to needing to returning the loan, fines up to $1M and/or fraud charges

What documents do I submit to my lender?

See the Appendix (or SBA Application Instructions Page 6) for more details, but here are the highlights:

Forgiveness application form and Schedule A (or something similar) Bank account statements showing cash compensation paid or third-party payroll

service provider reports Payroll tax filings (Form 941) – not required for those using PEOs State quarterly (if appliable) and individual employee wage reporting and

unemployment insurance tax filings to each relevant state Payment receipts, cancelled checks, or account statements documenting the amount

of contributions to health insurance and retirement plans Proof of FTEs from comparison period Payment receipts, cancelled checks, or account statements documenting the amount

of expenses for mortgage interest, rent and utilities For mortgage interest: lender amortization schedule or lender account statements

from February 2020 and covered period For rent: copy of lease or lessor account statements from February 2020 and covered

period For utilities, copy of invoices from February 2020

What documents do I keep but don’t need to submit?

Keep all documents for 6 years, including:

Documentation supporting the listing of each individual employee in PPP Schedule A Worksheet Table 1, including the “Salary/Hourly Wage Reduction” calculation, if necessary (e.g., the work from Instructions pages 4-5).

Documentation supporting the listing of each individual employee in your Average FTE count and compensation figures; specifically, that each listed employee received during any single pay period in 2019 compensation at an annualized rate of more than $100,000.

If applicable, documentation regarding any employee job offers and refusals, firings for cause, voluntary resignations, written requests by any employee for reductions in work schedule, and inability to hire similarly qualified people to those employed 2/15/20

If applicable, documentation supporting the FTE Reduction Safe Harbors. If using the Safe Harbor on reductions in business activity from health directives, then maintain relevant financial records and proof that your health directives were towards each location where you operate.

What happens after we submit our paperwork?

• Lender will have 60 days to submit your Forgiveness Application to the SBA after receiving a completed application. The SBA will then have 90 days to return the result of how much is being forgiven. Details on appeal process coming.

• You have until 12/31/20 to spend any other funds on allowable purposes and keeping in mind 60% of the total loan amount must be spent on payroll.

• Any amount that is not forgiven continues as a loan at 1% APR to be paid back 6 months after the loan disbursement date. Principal and interest must be paid back within 2 years from the start of the day of loan disbursement. However, you can request your lender extend this to a 5-year period. • You can pay the balance back immediately without penalty (except for any

interest that accrued)

• Loans above $2M will be subject to an audit from the SBA, but the SBA may review any loan, regardless of size, to review eligibility of the borrower, loan amount, and loan forgiveness amount.

FMA Paycheck Protection Program Toolbox



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• Established in 1999 to serve not-for-profit organizations around the country

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Appendix How to Complete the Standard Application

How to Complete Form EZ

8 vs. 24 Weeks Covered Period Options

Forgivable Expenses: Paid and Incurred

Salary / Hourly Wage Reduction Penalty Details

FTE Reduction Penalty Details

Forgiveness Application Glossary

Forgiveness Amount Nuances

Documents to Send to Your Lender & to Keep

Appendix

8 vs. 24 weeks Covered Period Options






Documents to Send to My Lender & to Keep

How to Complete the Standard Application

Two Forms to Review & Understand

Instructions Application Form

The Application Itself

5 Pages But You’ll Only Submit 3 Pages to Your Lender + Some Back Up Documents

Page 1: PPP Loan Forgiveness Calc. Form

Page 2: Certifications & Signature

Page 3: PPP Schedule A

Our Suggested Order for Filling Out: Page 4 Page 3 Page 1 Page 2.

You will also need to use the Instructions pages 4-5 if you had salary/hourly wage rate reductions.

Ultimately Here’s What You Need to Calculate

Maximum Amount Eligible for

Forgiveness

Less Penalties

Forgiveness Amount

60% on Payroll Check

Schedule A Worksheet – Employee Specific Information

Table 1: List employees who: • Received compensation from the Borrower at an annualized rate of less than or equal to $100,000 for all pay periods in 2019 or were not employed by the Borrower at any point in 2019.

Look at the payroll reports listing all of your employees who were(1) employed at any point during your covered period and (2) whose

principal place of residence is in the US, and divide them up into two lists:

Table 2: List employees who: • Received compensation from the Borrower at an annualized rate of more than $100,000 for any pay period in 2019.

Name Last 4 SSN Cash Compensation Average FTE Salary/Hourly

Rate Reduction

Name Last 4 SSN Cash Compensation Average FTE

Top of Page 4 Tables 1 + 2: How do I calculate?

Cash Compensation

To Calculate…. How to Calculate

Sum of gross salary/wages paid or incurred during your covered period per employee including:

• Salaries, wages, tips, commissions, bonuses, hazard pay, furlough pay

• Paid leave (vacation, family, medical or sick excluding leave covered by FFCRA credits)

• Allowances for dismissal or separation

Tips: • Prorate the last payroll that overlaps with your Covered

Period if the paid date falls after your Covered Period

• Keep in mind, you must cap the sum at $15,385 per employee if using the 8-week period and $46,154 if using the 24-week period.

Learn More:

Top of Page 4 Tables 1 + 2: How do I calculate?

To Calculate…. How to Calculate

Average FTE

(1) Add up the Number of hours paid per employee for each of the weeks during the Covered Period and (2) take the Average over the 8 weeks or 24 weeks. Round to the nearest tenth (e.g., 0.7, 0.4 0.5).

Standard Method: • 8 Weeks: Total Hours Paid During 8 Weeks/40/8• 24 Weeks: Total Hours Paid During 24 Weeks/40/24

Or

Simple Method: • 1 FTE if paid for 40+ hours each week• .5 FTE if paid for fewer than 40 hours each

week

Important: FTEs = Full-Time

EquivalentsNOT Headcount

Top of Page 4 Table 1: How do I complete?

Did you reduce that employee’s salary level or hourly rate in 2020?

Write 0

NO YES

See Next Slide for Exceptions. Appendix Shows You How to Calculate or on Page 4 + 5 of SBA

Application Instructions Document

Salary/Hourly Rate Reduction Per Employee

Learn More:

Top of Page 4 Table 1: Salary Reduction Penalty

Of (a) new employees who started in 2020 or (b) the employees with avg. annualized salaries of $100k or less

during all pay periods in 2019who were working during the Covered

Period, did you reduce any of their salaries/hourly rates after Jan 1,

2020?

No Reduction

NO!

YESStep 1: Was their avg. rate

reduced by more than 25% when comparing the Covered Period to

1/1/20– 3/31/20?

NO!Step 2: Did the reduction happen

between 2/15/20– 4/26/20?

YES

YES!

Step 3: Was the rate the employee had on 2/15/20

restored by 12/31/20?

YES!

Reduce by Compensation Lost During Covered Period As a Result of Salary/Wage Cut

NO

NOUse FMA Estimator for

Specific Calculations

Learn More:

Top of Page 4 Table 1: How do I complete?

Write 0

NO YES

Write Additional # of FTEs These Employees Would Have Represented

During the Covered Period

FTE Reduction Exceptions

Did any of the following happen and the relevant role was not filled by a new employee?

Did you make a good-faith written offer to rehire an employee during the Covered Period and it was rejected?

Was an employee fired for cause during the Covered Period? Did someone voluntarily resign or request and receive a reduction of their hours

during the Covered Period? Did you make a good-faith effort to rehire for a spot of someone who was an employee

on 2/15/20 had but you couldn’t find a similarly qualified employee by 12/31/20?

Top of Page 4: Schedule A Worksheet

Sample of What Table 1 Might Looks LikeFeel free to Use our Estimator, Your own Excel, or Check your Payroll Company

Bottom of Page 4: FTE Reduction Safe Harbor

Skip if Any of the Following is True:

(1) You did not reduce the number of employees or average paid hours of your employees between Jan 1, 2020 and the End Of Your Covered Period

(2) You were unable to operate between 2/15/20 and the End of Your Covered Period at the Same “Level of Business Activity” as before 2/15/20 due to

compliance with health directives related to COVID-19 (e.g., social distancing, sanitation, or other customer safety requirement)

(3) You reduced the number of FTEs you had after February 15th and didn’t get back up to February 15th levels by the end of your Covered Period or 12/31/20

Move on to Page 3: Schedule A – Total Up Your Payroll Information & Related Penalties

By completing the Page 4 Schedule A Worksheet, you’ll have most of what you need to calculate the math on Page 3 Schedule A

Finishing Page 3: Schedule A

There are 3 new fields to fill in not covered previously you need to add in. Time to grabs benefits reports and statements that overlap with your covered

period (paid and incurred)

Line 6. Employer Contributions for Employee Health

Insurance

Line 7. Employer Contributions to

Employee Retirement Plans

Line 8. Employer State + Local

Taxes Assessed on Employee

Compensation

Employer Paid Medical + Dental + Vision Insurance Paid + Prorating the amount Incurred but not Paid

Employer Contributions Remitted to Employee Accounts + Prorating the amount Incurred but not Remitted

State and Local Payroll Taxes (e.g., SUTA) Paid + Prorating the amount Incurred but not Paid

Ignore and Type 0 in Line 9 – Not Applicable to Nonprofits

Learn More:

Finishing Page 3: Bottom of Schedule A

Three Opportunities to Bypass the FTE Reduction Calculation (aka Penalty). Meet One to Bypass:

You did not reduce the number of employees or average paid hours of your employees between Jan 1, 2020 and the End Of Your Covered Period

You were unable to operate between 2/15/20 and the End of Your Covered Period at the Same “Level of Business Activity” as before 2/15/20 due to compliance with health directives related to COVID-19 (e.g., social distancing, sanitation, or other customer safety requirement)

You restored any reductions from 2/15/20 – 4/26/20 to their 2/15/20 levels by the end of your Covered Period or 12/31/20. You will know this based on completing the Bottom of Page 3: FTE Reduction Safe Harbor




Feb 15, 2019–June 30, 2019

January 1, 2020 –Feb 29, 2020


between 5/1/19 – 9/15/19

OR

Employee Average Hours Paid Per Week During

2/15/19 – 6/30/19FTE

Joanne 30 0.75

Jackson 40 1.0

Robert 40 1.0

Dianne 20 0.5

Rami 30 0.75

Average FTE during Borrower’s chosen reference period 4.0

1 2 Calculate the Average FTE from the Comparison Period for Line 11

Use the same methodology (standard or simple) you used on the Schedule A Worksheet


Sample of What The Full-Time Equivalency (FTE) Reduction Calculation Might Looks Like

See previous slide

From Page 4 Tables 1 + 2

Almost Done → Page 1: Forgiveness Calculation Form

Check out Appendix for Detailed Glossary


By completing Page 3 Schedule A first, you’ll have most of what you need to complete the Forgiveness Calculation Form, with just 3 new fields to fill in.

Grab your list of non-payroll expenses thatoverlap with your covered period (paid and incurred)


Payments


Payments








Learn More:


Time to Bring All Of Our Hard Work Together. Last Calculations:

Pg. 3

No Separate Sheet – Just Add HereNo Separate Sheet – Just Add Here

No Separate Sheet – Just Add Here

From Pg. 3

Pg. 3

If you are choosing to reduce your Forgiveness Amount, e.g., because you’re avoiding double dipping or have expenses associated with a (c)(4) or other ineligible nonprofit, it is likely you would then reduce from Line 11.

Trying to calculate before then could lead to unnecessary miscalculations and penalties.

Finish Line→ Page 2: Certifications + Signature





If you knowingly use the funds for other purposes or mispresent the forgiveness amounts, this could lead to needing to returning the loan, fines up to $1M and/or fraud charges


See the Appendix (or SBA Application Instructions Page 6) for more details, but here are the highlights:

Bank account statements showing cash compensation paid or third-party payroll service provider reports

Payroll tax filings (Form 941) – not required for those using PEOs State quarterly (if appliable) and individual employee wage reporting and


of contributions to health insurance and retirement plans Proof of FTEs from comparison period Payment receipts, cancelled checks, or account statements documenting the amount

of expenses for mortgage interest, rent and utilities For mortgage interest: lender amortization schedule or lender account statements

from February 2020 and covered period For rent: copy of lease or lessor account statements from February 2020 and covered

period For utilities, copy of invoices from February 2020

What documents do I keep but don’t need to submit?

Keep all documents for 6 years, including:

Documentation supporting the listing of each individual employee in PPP Schedule A Worksheet Table 1, including the “Salary/Hourly Wage Reduction” calculation, if necessary (e.g., the work from Instructions pages 4-5).

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.

If applicable, documentation regarding any employee job offers and refusals, firings for cause, voluntary resignations, written requests by any employee for reductions in work schedule, and inability to hire similarly qualified people to those employed 2/15/20

If applicable, documentation supporting the FTE Reduction Safe Harbors from the Schedule A Worksheet. If using the Safe Harbor on reductions in business activity from health directives, then maintain relevant financial records and proof that your health directives were towards each location where you operate.

Appendix








How to Complete Form EZIf you qualify to use it

Can I Use Form EZ?

Wage Reduction CheckYou did not reduce the annual salary or hourly wage of any employee* by more than 25% during the Covered Period (8 or 24 weeks) compared to

the period between 1/1/20 and 3/31/20? (*This applies to any employees who made than less than $100k

annualized on each paycheck in 2019)

The forms actually ask for similar information and you may not notice a major difference if your lender is using an online portal. But so you’re aware:

You can use Form EZ If You Meet A and either B or C:

Workforce Reduction CheckDid you reduce the number of employees or

average paid hours of employees between 1/1/20 and as of the end of the Covered Period?

(Ignore reductions that arose from the following when comparing: Inability to rehire similarly qualified employees; employees requested a

reduction in hours; firings for cause; or voluntary terminations)

A

B OrHealth & Safety Compliance

Check Did you experience reductions in “business activity” compared to prior 2/15 levels as a result of

complying with health directives related to COVID-19 (e.g., social

distancing, sanitation, etc.)?

C

PPP Loan Forgiveness Application Form 3508EZ

Check out Appendix: Forgiveness Application Glossary for Details


Cash Compensation1

Employer Paid Health

Insurance (Medical,

Dental, Vision)

Employer Paid State




+Employer

Paid Retirement

Benefits

+ +




Payments


Payments








An eligible nonpayroll 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.



Sample of What The Forgiveness Amount Calculation Might Looks Like

Finish Line→ Page 2: Certifications + Signature





If you knowingly use the funds for other purposes or mispresent the forgiveness amounts, this could lead to needing to returningthe loan, fines up to $1M and/or fraud charges

You qualify for at least one of the reasons why you’re allowed to use the Form EZ in the first place

What documents do I submit to my lender?See the Appendix (or SBA EZ Form Instructions Page 4) for more details, but here are the highlights:

Bank account statements showing cash compensation paid or third-party payroll service provider reports

Payroll tax filings (Form 941) – not required for those using PEOs State quarterly (if appliable) and individual employee wage reporting and


of contributions to health insurance and retirement plans If you are using EZ because you didn’t reduce your employees, proof of number of

FTEs on January 1, 2020 and on the end of your Covered Period (e.g., something like Schedule A from the full application listing each employee and their FTE count)

Payment receipts, cancelled checks, or account statements documenting the amount of expenses for mortgage interest, rent and utilities

For mortgage interest: lender amortization schedule or lender account statements from February 2020 and covered period

For rent: copy of lease or lessor account statements from February 2020 and covered period

For utilities, copy of invoices from February 2020

What documents do I keep but don’t need to submit?Keep all documents for 6 years, including:

Documentation supporting that annual salaries or hourly wages were not reduced by more than 25%. Payroll records that separately list each employee and show the amounts paid to each employee during the period between 1/1/20 and 3/1/20, and the amounts paid to each employee during the Covered Period.

Documentation regarding any employee job offers and refusals, refusals to accept restoration of reductions in hours, firings for cause, voluntary resignations, written requests by any employee for reductions in work schedule, and any inability to hire similarly qualified employees for unfilled positions on or before 12/31/20.

If applicable, documentation supporting that you did not reduce the number of employees or the average paid hours of employees between 1/1/20 and the end of the Covered Period (other than any reductions that arose from an inability to rehire individuals who were employees on 2/15/20, if the Borrower was unable to hire similarly qualified employees for unfilled positions on or before 12/31/20). This documentation must include payroll records that separately list each employee and show the amounts paid to each employee between January 1, 2020 and the end of the Covered Period.

If applicable, documentation supporting the Safe Harbor on reductions in business activity from health directives, including relevant financial records and proof that your health directives were towards each location where you operate.

Appendix








8 vs. 24 Weeks Covered Period Options

When is the Period for Forgiveness?

The primary purpose of the loan is to use it on allowable expenses during the Covered Period: the 8 or 24 weeks following when you received it. The allowable spending you have during this 8 or 24 weeks is what will count for forgiveness.

How To Define the Period: 8 Weeks aka 56 Days or 24 Weeks aka 168 Days

The Covered Period starts with the loan disbursement date.

However, for administrative convenience, organizations can calculate eligible payroll costs using an Alternative Payroll Covered Period if they are on a bi-weekly or more frequent schedule, delaying the start of their 8 or 24-week

period to the first day of their first payroll following when the loan was disbursed. This is not an option for semi-monthly or monthly payrolls.

Understanding The 8-Week Covered Period

Starting date: The day the lender makes the PPP loan disbursement.

Forgiveness “covered period:” 8 weeks

May be used for payroll; must be used for non-payroll expenses

8

weeks

Understanding The 24-Week Covered Period

Starting date: The day the lender makes the PPP loan disbursement.

Forgiveness “covered period:” 24 weeks

May be used for payroll; must be used for non-payroll expenses

24

weeks

May, June, July, August, September…

Considerations: 8 week or 24-week Covered Period

Amount of loan spent on eligible expenses How much will be spent?

Proportion of loan spent on payroll

Will at least 60% be achieved during the covered period?

Restricted fundingWhich period provides greater flexibility in claiming forgiveness for expenses without the risk of double dipping?

Certainty about future/risk tolerance

What certainty do you have around projected revenue, expenses and staffing over 24 weeks? What is your tolerance for uncertainty about reduction penalties?

Staffing Are you planning workforce reductions after the 8-week covered period?

You’re likely to choose 8 or 24 weeks if…

8 weeks 24 weeks

• A substantial portion of the total loan has been spent during 8 weeks, with 60% or more on payroll-related expenses

• Staffing decisions have been largely affected by PPP forgiveness. Cannot maintain current staffing levels over a 24-week period. Short-term planning involves a drop in FTEs.

• Want to avoid uncertainty. Low appetite for risk.

• Easier administrative burden• Clarity of anticipated forgiveness

amount from the 8-week covered period outweighs uncertainty of forgiveness amount over 24 weeks.

• Need additional time to spendmore of the loan on allowable costs and obtain forgiveness of a greater amount

• Likely to be able to spend 60% or more of the loan on payroll-relatedexpenses during 24 weeks.

• Staffing decisions have been made in consideration of PPP forgiveness, but not solely based on it. No immediate plans for significant workforce reduction.

• Opportunity for greater forgivenessover 24 weeks outweighs risk and uncertainty around forgiveness calculation.

What actions do you need to take now if you’re likely to use the 8-week covered period

1. Ensure that you have maximized forgiveness.• Remember that all incurred and paid expenses during the covered period

are eligible for forgiveness. Ensure that you have maximized paid expenses (that occur within the regular course of business.)

• If you are close to spending 60% of your total loan amount on payroll, try to achieve this goal to avoid any proportional reductions.

• Ensure that you have clarity on how current forgiveness penalties (FTE/wage reduction) impact you.

2. BreatheEven if you are fairly sure that you’ll be using the 8-week covered period, you are not required to submit anything. You can still await further guidance to see which period ultimately is more beneficial. You can change your mind.

What actions do you need to take now if you’re not sure which period you intend to use?

1. Estimate anticipated forgiveness for both the 8-week and 24-week period based on total expenses eligible for forgiveness and forgiveness penalties under the current rules with the understanding that these rules are in flux.

2. Stay updated on the changing rules

• Clarity on FTE penalty calculations

3. Breathe – you have time

Appendix









Diving In: What Expenses Count Towards Forgiveness?

Payroll Costs SpentDuring 8 or 24 Weeks

Non-Payroll Costs SpentDuring 8 or 24 Weeks

Cash Compensation1

Employer Paid

Health2 & Retirement

Benefits

Employer Paid State


AllowableRent &

Mortgage Interest

Utilities (Water, Gas, Electricity,

Transp. Internet, Phone)

+


2Group health benefits includes medical, dental, and vision.

Do we include the expenses paid during or incurred inthe 8 or 24 weeks in our calculations?

The Application allows for both methodologies to be used.

*Bills fully incurred before the 8 or 24-week period that are paid in the ordinary course during the 8 or 24-week period are allowed. Pre-paid mortgage interest for after the 8 or 24-week period is not allowed. We are awaiting guidance on how other pre-payments will be treated, but organizations should plan on them not being allowed.

Paid During* All of it Counts

Paid During & Incurred All of it Counts

Fully Incurred, Not Paid During But Is At Next Regular Due Date All of it Counts

Partially Incurred, Not Paid During But Is At Next Regular Due Date

Part of it Counts (Prorated)

What Counts During the Covered Period Towards Forgiveness?

Example 8-week Covered Period: April 20, 2020 – June 14, 2020 For Payroll Costs

April 20 – June 14

SBA may provide further guidance as there are some

alternative ways to read their application

KEYAll of It Counts

Part of It Counts (Prorated)

Payroll for April 12 –April 25 paid on May 1

Payroll for April 26 –

May 9 paid on May 15

Payroll for May 10 –May 23 paid on May 29

Payroll for May 24 –

June 6 paid on June 12

Payroll for June 7 –June 20 paid on June 26


Assumes Bi-Weekly Payroll and using standard Covered Period

Paid & Partially Incurred

Paid & Incurred

Paid & Incurred

Partially Incurred

Reminder: Cannot include more than $15,385 in cash compensation per

employee in your forgiveness amount

Paid & Incurred


Example 24-week Covered Period: April 20, 2020 – October 4, 2020 For Payroll Costs

April 20 – October 4



KEYAll of It Counts


Payroll for April 12 –April 25 paid on May 1

11 Full Bi-Weekly Payrolls Between April 26 – September 26

Payroll for Sept 27 –

Oct 10 paid on Oct 16


Assumes Bi-Weekly Payroll and using standard 24-week Covered Period


Paid & IncurredPartially Incurred

Reminder: Cannot include more than $46,154 in cash compensation per

employee in your forgiveness amount


Example 8-week Covered Period: April 20, 2020 – June 14, 2020 Non-Payroll: Rent


Rent for June paid on June 1



Rent for April paid on April 1 Rent for May paid on May 1

KEYAll of It Counts


An eligible nonpayroll 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.

Paid & Incurred

Partially Incurred


Reminder: Total non-payroll costs cannot exceed more than 40% of your

loan amount without incurring a reduction penalty


Example 24-week Covered Period: April 20, 2020 – October 4, 2020 Non-Payroll: Rent


Rent for Oct paid on Oct 4



Rent for April paid on April 15 Rent Payments for May –September paid the first of

every month

KEYAll of It Counts




Paid & Incurred

Partially Incurred





Example 8-week Covered Period: April 20, 2020 – June 14, 2020 Non-Payroll: Utilities




KEYAll of It Counts


Utilities for March 1 –

March 31 paid on April 22

Utilities for April 1 –

April 30 paid on May 15

Utilities for May 1 –

May 30 paid on June 12

Utilities for June 1 –

June 30 paid on July 17




Paid & Incurred

Paid Partially Incurred




Example 24-week Covered Period: April 20, 2020 – October 4, 2020 Non-Payroll: Utilities




KEYAll of It Counts


Utilities for March 1 – March 31

paid on April 22

6 Months of Utilities for April 1 –September 30 paid on the 15th of

every month

Utilities for Oct 1 – Oct 31 paid on Nov 15



Paid &Some Partially Incurred; Some Fully

Incurred

PaidPartially Incurred



Appendix









Salary Reduction Penalty

Of (a) new employees who started in 2020 or (b) the employees with avg. annualized salaries of $100k or less

during all pay periods in 2019who were working during the Covered

Period, did you reduce any of their salaries/hourly rates after Jan 1,

2020?

No Reduction

NO!

YESStep 1: Was their avg. rate

reduced by more than 25% when comparing the Covered Period to

1/1/20– 3/31/20?

NO!Step 2: Did the reduction happen

between 2/15/20– 4/26/20?

YES

YES!

Step 3: Was the rate the employee had on 2/15/20

restored by 12/31/20?

YES!

Reduce by Compensation Lost During Covered Period As a Result of Salary/Wage Cut

NO

NOUse FMA Estimator for

Specific Calculations

Calculate: Salary Reduction Penalty

Step 1 Determine if pay was reduced more than 25% for any individual employee (earning less than or equal to $100,000 for all pay periods in 2019)

Average annual salary or hourly wage

during Covered Period (or Alternate)

÷Average annual

salary or hourly wage between 1/1/20 and

3/31/20

=≥0.75

No Reduction over 25%

≤0.75Reduction over

25%

Skip Steps 2 -3

Proceed to Step 2


Step 2

Average annual salary or hourly wage as of

Feb. 15, 2020

Determine if Salary/Hourly Wage Reduction Safe Harbor is met

Average annual salary or hourly wage between

2/15/20 and 4/26/20

Safe Harbor has not been metIf (b) ≥ (a)

Safe Harbor applies

Calculate:

Proceed to Step 3

(a) (b)

If (a) ≤ (b) Proceed to Step 2.5


Step 2.5

(a) Average annual salary or hourly wage as

of Feb. 15, 2020

Determine if Salary/Hourly Wage Reduction Safe Harbor is met

(b) Average annual salary or hourly wage

between 2/15/20 and 4/26/20

(b) ≥ (a)Safe Harbor does

not apply

If:(a) < (b)

Average annual salary or hourly wage as of

the end of the Covered Period or 12/31/20

Calculate:

Proceed to Step 3

If:

(c) ≥ (1)Safe Harbor has

been met (no reductions)

(c) < (1)Safe Harbor has not been

met

Proceed to Step 3

Skip Step 3

vs.

(c)Average annual salary or hourly wage as of

the end of the Covered Period or 12/31/20


Hourly EmployeesStep 3 Determine Salary/Wage Reduction

Average # of hours worked

per week between

1/1/20 and 3/31/20

Average annual hourly wage during

Covered Period

XAverage annual

hourly wage between

1/1/20 and 3/31/20

-0.75 X

X 8 or 24Hourly

Reduction for Table 1=


Salaried EmployeesStep 3 Determine Salary/Wage Reduction

Average annual salary

during Covered Period

XAverage annual

salary wage between

1/1/20 and 3/31/20

-0.75 X

÷ 52Salary

Reduction for Table 1

8 or 24

=

Appendix









FTE Reduction Penalty

Goal: Compare your FTEs during your 8-week forgiveness period to a prior reference period to see if a penalty

needs to be assessed if you do nothing

While you will look at specific employees to determine your FTE count in the time periods, you do not need to

retain the exact same people

Average FTEs: What’s an FTE in this context?

Defining Full-Time Equivalent Employees (FTEs/FTEEs)

FTEs ≠ headcount or number of employees

If you have 5 part-time employees, who each work 1 day per week…

Headcount FTEs5 1.0

Average FTEs: What’s an FTE in this context?

(2) Choose a Comparison Period


Feb 15, 2019–June 30, 2019

January 1, 2020 –Feb 29, 2020


between 5/1/19 – 9/15/19

Mathematical Method1 FTE = 40 hours/week

Example: Someone who is paid for 10 hours/week = .25 FTE

Simple MethodAnyone who is paid for 40

hours/week or more = 1 FTE

Anyone who has fewer hours = .5 FTE

(1) Choose a Calculation Method

OROR

Based on the initial reading of the Application:

Calculate: FTE Reduction Exceptions

Employees w/ change in FTE

ReferencePeriod FTE

CoveredPeriod

FTEWhat Happened? Impact

Jackson 1.0 0 Laid off Feb 19, 2020 Qualifies for Safe Harbor: no reduction if 1.0 FTE is

restored by 12/31/20Dianne 0.5 0 Left voluntarily during

Covered PeriodNo reduction in FTE

Rami 0.75 0.25 Requested a reduction in hours

during Covered Period

No reduction in FTE

Benjamin 0.5 1.0 Increased hours before Covered Period

Increases average FTE

Michelle 1.0 0 Fired for cause before Covered Period

Reduction in FTE

Rhonda N/A 0.75 New hire during Covered Period

Increase average FTE

FTE Reduction Penalty



Feb 15, 2019–June 30, 2019

January 1, 2020 –Feb 29, 2020


between 5/1/19 – 9/15/19

OR

Based on the initial reading of the Application:

Calculate: Average FTE (Mathematical)

Employee Average Hours Paid Per Week During Reference Period

FTEAverage Hours Paid

Per Week During Covered Period

FTE

Joanne 30 0.75 30 0.75

Jackson 40 1.0 0 0

Robert 40 1.0 40 1.0

Dianne 20 0.5 0 0

Rami 30 0.75 10 0.25Benjamin 20 0.5 40 1.0

Michelle 40 1.0 0 0

Rhonda N/A N/A 30 0.75

Average FTEs Per Week During the Reference Period:

5.5Schedule A,

Line 11

Average FTEs Per Week During the 8

or 24-Week Forgiveness Period:

3.8Schedule A, Line 12

Calculate: FTE Reduction Quotient

Average FTEs Per Week During the 8

or 24-week Forgiveness Period

Average FTEs Per Week During the Reference Period

Schedule A, Line 123.8

Schedule A, Line 11

5.5

÷ ÷ ÷

FTE Reduction Quotient

0.69 Schedule A, Line 13

Example: Application:

Appendix









Forgiveness Calculation Form Glossary

Fields GuidanceBusiness Legal Name Enter the same info. as on your original PPP Application Form.

DBA or Trade Name Enter the same info. as on your original PPP Application Form.

Business Address Enter the same info. as on your original Application Form, unless there has been a change in address

Business TIN (EIN, SSN) Enter the same info. as on your original PPP Application Form.

Business Phone Enter the same info. as on your original PPP Application Form.

Primary Contact Enter the same info. as on your original Application Form, unless there has been a change in contact

Email Address Enter the same info. as on your original Application Form, unless there has been a change in contact

SBA PPP Loan Number Enter the loan number assigned by SBA at time of approval. Request from your Lender if necessary.

Lender PPP Loan Number Enter the loan number assigned to the PPP loan by your Lender.

PPP Loan Amount Enter the disbursed principal amount of the PPP loan

PPP Loan Disbursement Date Enter the date the PPP loan funds hit your bank account


Fields Guidance

Employees at Time of Loan Application

Headcount (not FTEs) on the day you submitted your original loan application to your lender

Employees at Time of Forgiveness Application

Headcount (not FTEs) of all employees on the day you’re submitting your PPP application to your lender.

EIDL Advance Amount If you received an EIDL Advance, Enter the total amount of the EIDL advance (e.g., $10,000)

Payroll Schedule Select one or more frequencies of payroll you used during the loan period

Covered PeriodThe 8-week (56 days) or 24-week (168 days) period starting the day PPP loan funds hit your bank account.(Ex. Funds received April 20, 2020 + 55 days = June 14, 2020)

Alternative Payroll Covered Period, if applicable

Only fill in if not using the standard Covered Period. The 8 or 24-week period starting the first day of the bi-weekly or weekly payroll that began after your loan was disbursed.

If Borrower Received PPP Loans in Excess of $2M

Based on your total approved principal amount. The SBA has indicated they will audit loans above $2M, including for the certification of need from the original application

Appendix









Potential Forgiveness Amounts

Your forgiveness amount is the smallest of these three options:

1 Potential Forgivable Amount Less the Penalties (“Modified Total” Application pg. 1, Line 8)

2 Total Loan Amount(“PPP Loan Amount” Application pg. 1, Line 9)

3 Amount Spent on Payroll in the 8 Weeks ÷ .60(“Payroll Cost 60% Requirement” Application pg. 1, Line 10)

Any other nuances to understand?

• If you’re being reimbursed from restricted funding sources that covered the same exact expenses as PPP and you don’t want to double dip, you’ll need to reduce your Line 11. Forgiveness Amount from Page 1 for the amount being reimbursed by other sources. Incorporating this adjustment before that calculation may cause very difficult calculations and may also reduce your forgiveness amount further than necessary.

• If you share employees and/or allowable operations expenses with another nonprofit that isn’t a (c)(3) or (c)(19), you’ll need to reduce your Line 11. Forgiveness Amount from Page 1 for the amount of expenses associated with those other entities.

• If you received sick and family leave credits covered by the Families First Coronavirus Response Act (FFCRA), you cannot include those leave credits in allowable Payroll Costs throughout the Application.

• If you are a seasonal employer, you can adjust the Average FTE comparison period used on the Schedule A, line 11 to be based on the average number of FTEs/month between any consecutive 12-week period between 5/1/2019 – 9/15/2019.

As always, check with your lender with questions on nuances to see how they’d like you to proceed

PPP & Restricted Funding Sources• Organizations receiving federal funds cannot "double dip," meaning you cannot claim to

the federal government you spent different federal funds on the same expenses. Per OMB guidance, PPP funds need to be treated as federal funds for this purpose. It is also likely that restricted state and local government and restricted private philanthropic funders will adopt the same approach. Double dipping occurs if you get reimbursed for the same expense twice.

• Nonprofits will need to keep good records to show which employees are being paid from what source so that the government isn't paying more than 100% of a salary. This is a good approach for all of your restricted funding sources.

• You should consider comparing your allowable expenses for PPP vs. your restricted grants and contracts. There may be other allowable expenses your other restricted funding sources can cover, including during the Covered Period (8 or 24 weeks).

• Some may choose to reduce their forgiveness request because they want to be able use a drawn down from their restricted funding sources.

Check out Navigating the Interaction Between PPP and Restricted Funding Sources and the OMB Memo: Administrative Relief Exceptions for COVID-19 Crisis on the PPP Toolbox


Appendix








Documents to Send to Your Lender & to Keep


Each borrower must submit documentation verifying eligible cash compensation and non-cash benefit payments consisting of each of the following:

Cash Compensation: Bank account statements or third-party payroll service provider reports 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: Payroll tax filings (Form 941) State quarterly (if appliable) and individual employee wage reporting

and unemployment insurance tax filings to each relevant stateBenefits:

Payment receipts, cancelled checks, or account statements documenting the amount of employer contributions to health insurance and retirement plans


FTEs: Each borrower must submit documentation for one of the following periods

showing the average number of FTE employees on payroll per month:1. Between February 15, 2019 and June 30, 2019 or2. Between January 1, 2020 and February 20, 2020

*Seasonal employers may use (1), (2), or any consecutive 12-week period between May 1, 2019 and September 15, 2019

Documents may include:• Payroll tax filings to the IRS (Form 941)• State quarterly business and individual employee wage reporting and

unemployment insurance tax filings

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


Non-payroll:Each borrower must submit documentation verifying the existence of the obligations/services prior to February 15, 2020 and eligible payments from the Covered Period:

Business mortgage interest payments & rent or lease payments: Copy of Lender amortization schedule for mortgage interest Current lease agreement for rent or lease

Receipts or cancelled checks verifying eligible payments from the Covered Period; or lender account statements from Feb 2020 and the months of Covered Period through one month after the end of the Covered Period

Business Utility payments: Copy of invoices from Feb 2020 and those paid during the Covered Period; Receipts, cancelled checks, or account statements verifying eligible

payments you’re seeking forgiveness for

Where Are Some Areas We Awaiting More Guidance?

Will organizations be able to apply for forgiveness using a period in between 8 and 24 weeks as soon as they finish spending down the loan in the right ratio?

How will the simplified method of calculating FTE interact with the 24-weeks especially if organizations have to make reductions during the 8-week period?

What additional details will be provided on the safe harbor for experiencing reductions in business activity as a result of health directives related to COVID-19?

What will online application forms and documentation requirements from lenders look like? What kinds of reports will payroll companies create to make this easier for you?

How will the EIDL advance and/or loan be taken into account for PPP forgiveness?

How will organizations who want to request a forgiveness amount lower than their initial calculations lead to make sure they can do so?

You’re being reimbursed from restricted funding sources that covered the same exact expenses as PPP and you don’t want to double dip

You want to exclude the payroll and non-payroll expenses attributed to an affiliated (c)(4), (c)(6), or other nonprofit prohibited from applying for PPP