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BDO USA, LLP, a Delaware limited liability partnership, is the U.S. member of BDO International Limited, a UK

company limited by guarantee, and forms part of the international BDO network of independent member firms.

PAYCHECK PROTECTION

PROGRAM (PPP):

UPDATE REGARDING ISSUED GUIDANCE ON

LOAN FORGIVENESS (UPDATED THROUGH SBA GUIDANCE ISSUED MAY 22, 2020)

May 28, 2020

Today’s Speakers from BDO USA, LLP

2 PAYCHECK PROTECTION PROGRAM (PPP) SESSION 5

• Andrew Gibson - Tax Managing Partner, Global Employer

Services/National Tax Office, Atlanta

• Peter Diakovasilis – Tax Partner, Core Tax Services, New York Metro

• Joan Vines - Managing Director, Compensations & Benefits/GES

Technical Practice Leader, National Tax Office, Greater Washington

D.C.

Agenda

3 PAYCHECK PROTECTION PROGRAM (PPP)

• SBA Loan Forgiveness Application (dated May 15, 2020)

• Expected Forgiveness Amount

• Limits on Loan Forgiveness

• Wage and Salary Reductions

• Full Time Equivalent Employees

• “SBA 75%/25% Rule”

• Documentation

• Takeaways

Key Strategies for PPP Loan Forgiveness

Now that you have received your Paycheck Protection Program (PPP) loan and are in your “eight-week covered period”, it is imperative that you establish a strategy to ensure that your spending falls within SBA guidelines. A sample strategy will include items such as:

• Review your initial spending plan for the eight-week period, • Monitor and observe changes in Small Business Administration (SBA) guidance, • Update the plan as needed to pay only allowable expenses during the eight weeks, • Document your actual spending with special attention to the loan forgiveness

requirements, and • Get prepared to compile a loan forgiveness report or certification to provide to your SBA

lender This webcast will provide insight on the SBA guidance released on May 15 and May 22 as well as a roadmap to coordinate preparation of submitting you loan forgiveness application.

Most Up To Date Guidance on PPP Loans May 15, 2020


Some Questions Addressed

- The Audit Threshold of Two Million will be applied to the Borrower and its Affiliates

- A Special Payroll Run at the End of the Covered Period is Not Necessary

- Certain Payrolls can use an Alternative Payroll Covered Period

- Payroll Costs Paid during the 8-weeks are Eligible for Forgiveness; Incurred but Paid

during the next Payroll Cycle are also Eligible for Forgiveness

- Nonpayroll Costs can be Paid After the Covered Period but Before the Next Billing

Cycle

- Maximum Compensation for the 8-week period is $15,385 ($100,000/52*8)

- Salary/Hourly Wage Reduction Uses Rate of Pay not Actual Payments

- Apply Salary/Hourly Wage Reduction before FTE Reduction/ No Double Jeopardy

- Forty Hours is Used to Calculate Average Full-Time Equivalents by Person

- Employees who Choose not to Work Do NOT Reduce FTE Count – FTE Exception

- Employees that are Re-hired by June 30, 2020 Do NOT Reduce FTE Count – FTE Safe

Harbor

- The Application Currently Expires on October 31, 2020

Even so, More Questions Remain

PPP Loan Forgiveness Application – SBA Form 3508


How to Apply for Forgiveness:

- Complete SBA Form 3508, Loan Forgiveness Calculation Form and PPP Schedule A

- Submit paper or electronic forms to your Lender (or the Lender that is servicing your

loan) according to Lender’s instructions

SBA Loan application has four (4) components:

1. PPP Loan Forgiveness Calculation Form

2. PPP Schedule A – Summary Information for FTE and Wage/Salary Reductions

3. PPP Schedule A Worksheet – FTE and Wage/Salary Reductions

4. Optional PPP Borrower Demographic Information Form

Form 3508 Calculation

**Note the Alternative Payroll Covered Period is

available only if payroll is weekly and bi-weekly

Borrower might not readily know the affiliates to include


Another Employee Count

Form 3508 Loan Forgiveness Calculation


Covered Period and Alternative for Some Payrolls


Covered Period General Rule - Eight-week (56-day) period begins on the PPP Loan Disbursement Date. For example, if the

Borrower received its PPP loan proceeds on Monday, April 20, the first day of the Covered Period is

April 20 and the last day of the Covered Period is Sunday, June 14

- Under the existing guidance, this require payroll periods that cross the last day of the

Covered Period to be prorated to exact days in the period

Alternative Payroll Covered Period for weekly or bi-weekly payroll periods - Eight-week (56-day) period begins on the first day of first pay period following the PPP Loan

Disbursement Date. 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

- This avoids the allocation of payrolls at the end of the period

- Does not change the Covered Period for non-payroll costs

Payroll Costs for Forgiveness- Timing


Payroll costs are considered paid on the day that paychecks are distributed or

the Borrower originates an ACH credit transaction

Payroll costs are considered incurred on the day that the employee’s pay is

earned

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. Otherwise,

payroll costs must be paid during the Covered Period (or Alternative Payroll

Covered Period)

Therefore, no special payroll processing is required on the last day of the

Covered Period (or Alternative Payroll Covered 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 period ($100,000 *56/365 = $15,385)

Payroll Costs for Forgiveness - Timing


Cash compensation - Gross salary, gross wages, gross tips, gross commissions, paid leave (vacation, family, medical or

sick leave, other than including leave covered by the Families First Coronavirus Response Act), and

allowances for dismissal or separation paid or incurred. Differs from Form W-2, box 1

- No more than $15,385 should be counted for an employee during the covered period or alternative

payroll covered period

Other Compensation – Total Amount Paid by Borrower for - Employer contributions for employee health insurance, including employer contributions to a self-

insured, employer-sponsored group health plan,

- Employer contributions to employee retirement plans,

- Employer state and local taxes assessed on employee compensation (e.g., state unemployment

insurance tax), and

- Do not include employee contributions when calculating payroll costs because employee amounts

are included in the gross wages used for cash compensation

Owner-employee, a self-employed individual, or

general partner

Caps on the Amount of Loan Forgiveness

The lower of the individual’s applicable compensation across all businesses in 2019 or $100,000

Times 8/52, which is $15,385 maximum

Schedule C fliers are capped by their owner compensation replacement, calculated by multiplying the

2019 net profit times 8/52, not to exceed $15,285

General partners are capped by the amount of their 2019 net earnings form self-employment (reduced

by claimed section 179 expense deduction, unreimbursed partnership expenses and depletion from oil

and gas properties) multiplied by .9235 that takes into account SE taxes multiplied by 8/52, not to

exceed $15,285

No additional forgiveness is provided for retirement or health insurance contributions for Sch C filer

and general partners, as such expenses are paid out of their net self employment income

Owner-employees are capped by the amount of the 2019 employee cash compensation and employer

retirement and health care contributions made on their behalf

Non-Payroll Costs for Forgiveness


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

Covered mortgage obligations: payments of interest (not including any

prepayment or payment of principal) on any business mortgage obligation on

real or personal property incurred before February 15, 2020 (“business

mortgage interest payments”)

Covered rent obligations: business rent or lease payments pursuant to lease

agreements for real or personal property in force before February 15, 2020

Covered utility payments: business payments for a service for the distribution

of electricity, gas, water, transportation, telephone, or internet access for

which service began before February 15, 2020

Eligible nonpayroll costs cannot exceed 25% of the total forgiveness amount

Non-Payroll Costs for Forgiveness – Beginning of

Period Example


Covered Period Begins May 6, 2020 and Ends June 30, 2020

Telephone Service period is April 1 – April 30, 2020 which is invoiced on

May 1, 2020 and due on May 7, 2020

- Payment is timely on May 1-5, 2020 - Not counted because expense was incurred and

paid prior to the covered period

- Payment is timely on May 6-7 2020 – Entire amount counts because it was paid during

the covered period

- Payment is late on May 8 – June 30, 2020 – Entire amount counts because it was paid

during the covered period

- Payment is very late after June 30, 2020 - Nothing can be included because it was not

incurred nor paid during the covered period

Non-Payroll Costs for Forgiveness – End of Period

Example


Covered Period Begins May 6, 2020 and Ends June 30, 2020

Telephone Service period is June 1 – June 30, 2020 which is invoiced on

July 1, 2020 and due on July 7, 2020

- Payment is timely on July 1-7, 2020 – Entire amount counts because expense was

incurred in the Covered Period and paid before the next billing date of August 1, 2020

- Payment is late on July 8 – August 31, 2020 – Entire amount counts because it was

incurred during the Covered Period and paid before the next billing date

- Payment is very late after August 31, 2020 - Nothing can be included because it was

not paid before the next billing date notwithstanding the fact that the expense was

incurred during the Covered Period

Form 3508 – Schedule A


Form 3508 – Schedule A (Cont’d)

How does this impact health care and retirement plans for owners and self-employeds


Adjustments That Reduce

Loan Forgiveness


Salary/Hourly Employees Wage Reductions During

Covered Period


Applies before application of the FTE reduction analysis

Designed to protect wages for employees whose annualized cash

compensation for all pay periods in 2019 are less than $100,000

For each protected employee:

- Step 1: Determine if pay was reduced more than 25%

- Compare the annual salary or the hourly wage during the covered or alternative

payroll covered period with that of Q1

- Comparison or rates instead of actual payments, eliminates the issue created by 8

weeks not being 75% of 13 weeks

- Step 2: For those with a greater than 25% reduction, determine if the Salary/Hourly

Wage Reduction Safe Harbor is met on June 30, 2020

- Comparison is to “Average” salary/wage rate on June 30th so back wages may be

required

- Step 3: For those not meeting the safe harbor, determine the Salary/Hourly Wage

Reduction

Salary/Wage Reduction Example – Fact Pattern


Enter Whether

Average Annual Salary

Wages and Salaries

Maximum Single Pay

Do any of the following apply (i) offer to rehire rejected, (ii) fired for cause, (iii) voluntarily

resigned, or (iv) voluntarily requested reduction of hours? In all cases, the position was not filled

by a new employee.

Employee is Hourly or Or Hourly Wage Paid During First Period Amount During 2019

Employee Name Salaried First Quarter 2020 Quarter 2020 (If Hired in 2020 Enter Zero)

Employee 1

Salaried

52,000

13,000

1,000

No

Employee 2 Salaried 104,000 26,000 2,000 No

Employee 3 Hourly 25 13,000 1,000 No

Employee 4 Hourly 15 6,825 1,000 Yes

Annual Salary or Average Annual Salary Average Annual Salary or

Hourly Wage as of or Hourly Wage Between Hourly Wage as of Wages and Salary for the 8- Week Covered Period Employee Name February 15, 2020 Feb. 15 and April 26, 2020 June 30, 2020 Hours Worked for the 8-Week Covered Period

Employee 1

52,000

31,200

52,000

4,800

320

Employee 2 104,000 104,000 104,000 16,000 219

Employee 3 25 15 15 4,800 320

Employee 4 15 - - - -

Salary/Wage Reduction Example – Results


Wages in Excess of Wage and Salary Safe

$100,000 Protected Wages Harbor Met

Employee Name (Yes/No) (Yes/No) (Yes/No)

Employee 1 No Yes Yes

Employee 2 Yes No No

Employee 3 No Yes No

Employee 4 No No No

First Quarter 2020 Covered Period Wages 75 Percent Protected

Average Annual Salary 75 Percent of Paid for Employees Wages Less Covered Reduction Relating to

Employee Name or Hourly Wage Protected Wages with Protected Wages Period Wages Paid Salary and Wages

Employee 1

-

-

-

-

-

Employee 2 - - - - -

Employee 3 25 19 15 4 1,200

Employee 4 - - - - -

Adjustments That Can Reduce Loan Forgiveness


Full-Time Equivalency (FTE) Reduction Calculation

- What is a FTE

- 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

- Observation:

- Simplified method eliminates need for hours worked; just identify full time and

part time employees

Example 1 •Previously, 3 employees @ 10 hrs. equals .9 FTE regular method or 1.5 FTE simplified method •Covered period 1 employee @ 30 hrs. equals .8 FTE regular method or .5 FTE simplified method •If more work is being done be fewer people regular appears better

Example 2 •Previously, 3 employees @ 20 hrs. equals 1.5 FTE regular method or 1.5 FTE simplified method •Covered Period 3 employees @ 10 hrs. equals .9 FTE regular method or 1.5 FTE simplified method •If all non-full-time employees are working fewer hours simplified method appears better

Comparison of Regular and Simplified FTE

Determination


(Cont’d)


Full-Time Equivalency (FTE) Reduction Calculation

- If Borrower has not reduced the number of employees or the average paid hours of

employees between January 1, 2020 and the end of the Covered Period there is no

FTE reduction

- Otherwise determine the quotient by dividing the Total Average FTEs during the

covered period by the Average FTE during the Borrower’s chosen reference period but

not to exceed 1.0

FTE Reduction Safe Harbor for Rehires

- Borrower is exempt from the reduction in loan forgiveness based on FTE employees

described above if both of the following conditions are met:

1. Borrower reduced its FTE employee levels in the period beginning February 15, 2020, and

ending April 26, 2020

2. Borrower then restores 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

- If salary/wages are not restored there may still be a reduction to loan forgiveness

under the Salary/Wage reduction rule


(Cont’d)


FTE Reduction Exceptions that do not reduce Loan Forgiveness:

- 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

- Any employees who during the Covered Period or the Alternative Payroll Covered

Period but only if the position was not fill by a new employee

- were fired for cause

- voluntarily resigned

- voluntarily requested and received a reduction of their hours

These exceptions are critical to prevent reduction of loan forgiveness

when employees cannot be brought back through no fault of the

Borrower

Example 1 •Previously, 3 employees @ 10 hrs. equals .9 FTE regular method or 1.5 FTE simplified method •Covered period 1 employee @ 30 hrs. equals .8 FTE regular method or .5 FTE simplified method •If more work is being done be fewer people regular appears to be better

Example 2 •Previously, 3 employees @ 20 hrs. equals 1.5 FTE regular method or 1.5 FTE simplified method •Covered Period 3 employees @ 10 hrs. equals .9 FTE regular method or 1.5 FTE simplified method •If all non full-time employees are working fewer hours simplified method appears to be better

Comparison of Regular and Simplified FTE

Determination

FTE Reduction Example


Step 1 - Determine the Reference Period

Option #1 - Average Number of FTE Employees for February 15, 2019 to June 30, 2019 ("2019 Comparison Period")

Beginning date for each week, unless otherwise stated, for the

2019 Comparison Period

Enter the number of employees hired as full-time or working on

average 40 hours per week

Enter the number of part-time

employees for each week

Sum all hours during the month worked by part-time or variable hour employees. Do not count any hours in excess of average 40 hours per

week for any one employee.

Number of part-time/ variable hours FTE

employees

Weekly Average

February 15, 2019

10

3

90

2.30

12.30

February 22, 2019 10 3 90 2.30 12.30 For Brevity Purposes, Only Illustrating the First Two Periods and the Last Two Periods

June 28, 2019 15 5 165 4.10 19.10

June 29 to June 30, 2019 15 5 165 4.10 19.10

FTE Average for 2019 Comparison Period

15.90

Option #2 - Average Number of FTE Employees for January 1, 2020 to February 29, 2020 ("2020 Comparison Period")


2020 Comparison Period





Sum all hours during the month worked by part-time or variable hour employees. Do not count any hours in excess of average 40 hours per

week for any one employee.


employees

Weekly Average

January 1, 2020

9

5

140

3.50

12.50

January 8, 2020 9 5 140 3.50 12.50 For Brevity Purposes, Only Illustrating the First Two Periods and the Last Two Periods

February 26, 2020 8 4 115 2.90 10.90

February 27 to February 29, 2020 8 4 115 2.90 10.90

FTE Average for 2020 Comparison Period

11.70

FTE Reduction Example (Cont’d)


Option #3 - Seasonal Employers May Use a Consecutive 12-Week Reference Period Between May 1, 2019 and September 15, 2019 ("Seasonal Employer Period")

Enter the first date the seasonal employer client would choose the 12-week consecutive reference period between May 1, 2019 and September 15, 2019.

5/20/2019

Beginning date for each week of the consecutive 12-week period

between May 1, 2019 and September 15, 2019





Sum all hours during the week worked by part-time or variable

hour employees. Do not count any hours in excess of average 40 hours

per week for any one employee.


employees

Weekly Average

May 20, 2019

15

6

160

4.00

19.00

May 27, 2019 15 6 165 4.10 19.10 For Brevity Purposes, Only Illustrating the First Two Periods and the Last Two Periods

July 29, 2019 16 6 160 4.00 20.00

August 5, 2019 16 6 155 3.90 19.90

FTE Average

20.00

Step 2 - Calculate FTEs for the Covered Period

Beginning date for each week of

the 8-week Covered Period





Sum all hours during the week worked by part-time or variable

hour employees. Do not count any hours in excess of average 40 hours

per week for any one employee.


employees

Weekly Average

April 26, 2020

3

1

23

0.60

3.60

May 3, 2020 3 1 32 0.80 3.80 For Brevity Purposes, Only Illustrating the First Two Periods and the Last Two Periods

June 7, 2020 3 1 15 0.40 3.40

June 14, 2020 4 - - - 4.00

FTE Average

3.70



Step 3 - Determine the Rehire Calculation for the Period February 15, 2020 to April 26, 2020 ("Rehire Period")


Rehire Period

Enter the number of employees hired as full-time or working on average 40

hours per week for the week

Enter the number of part-time employees for each week

Sum all hours during the week worked by part-time or variable hour employees. Do not count any hours in excess of average 40 hours per week for any one employee.


employees

Weekly Average

February 15, 2020

8

4

115

2.90

10.90

February 22, 2020 8 4 115 2.90 10.90

For Brevity Purposes, Only Illustrating the First Two Periods and the Last Two Periods

April 18, 2020 7 3 90 2.30 9.30

April 25 to April 26, 2020 7 3 90 2.30 9.30

FTE Average for the Rehire Period

9.60

Number of FTEs on February 15, 2020

10.90

Number of FTEs that can be restored via rehire

1.00

Number of FTEs as of June 30, 2020

10.00

Were FTEs restored via rehire?

No



Has there been a reduction of employees or the average paid hours between January 1, 2020 and the end of the Covered Period? If "No", FTE Reduction Quotient should be 100%.

Yes

Were FTEs restored via rehire? If "Yes", FTE Reduction Quotient should be 100%. No

Reduction Based on Reduction of Number of Employees

Average FTE in Covered Period 3.7

Lesser of, Option #1 - 2019 Comparison Period or Option #2 - 2020 Comparison Period. Seasonal Employers Can Do either the 2019 Comparison Period, 2020 Comparison Period, or Seasonal Employer Period.

11.7 FTE Reduction Quotient 32%

Which Employees to Count in FTE Calculations


Count the employees for the employer as used for the PPP

- Affiliated groups

- If NAICS Code begins with 72 the individual locations used for the PPP application

- Member of affiliated groups that include NAICS code of 72, all members except the

NAICS code 72

Employees of the Employer

- Those who receive wages under the employer’s EIN(s)

- Those who render services but are paid under a different EIN such as a professional

employer organization or other similar arrangement

- Other arrangements might include a payroll trustee agreement or a management

companies that pay workers under its EIN but charges back the payroll cost to its

customers

Loan Forgiveness Calculation Example


ABC Company

Eligible Loan Forgiveness (Tentative) 8-Week Covered Period

Totals

Covered Loan Amount

$ 200,000

Less: Loan Forgiveness Calculated Below $ (35,798)

Covered Loan Principal Amount To Be Repaid $ 164,202

How the Loan Proceeds were Spent:

Gross Wages

Includes wages, tips, PTO or other paid leave, severance (limited to $15,385 per person, i.e., maximum annual salary of $100,000 times 8 weeks over 52 weeks in a year) but does not include paid leave required by FFCRA

$80,000

Employee Benefits - employer portion

Group health care, major medical, dental, vision and prescription not taxed to employee (employee contributions through elective deferrals included in gross payroll)

8,000

Contributions to qualified retirement plans for employees, 401k match, profit sharing, simplified employer plans, defined benefit plans, etc. (not retirement contributions for self employed persons)

6,400

Payments of state/local taxes based on compensation -

Self-employment income of partners or owners operating as a self employed induvial (not payments to non-owner independent contractors) limited to $15,385 per person

-

Total Payroll Costs (Line 1) $94,400

Mortgage Interest (Line 2) -

Rent (Line 3)

20,000

Utilities (Line 4) -

Total Non-Payroll Costs $20,000

Expected Forgiveness Amount Before Reduction $114,400

Loan Forgiveness Calculation Example (Cont’d)

Loan Forgiveness Reduction:


Covered Loan Expected Forgiveness Amount

Amount of principal that a borrower expended during the covered period on payroll costs, payments of interest on any covered mortgage obligation, payments on any covered rent obligation, and covered utility payments

$114,400

During the Covered Period or Alternative Payroll Covered Period was the average annual salary or hourly wage for all employees at least 75% of each employee's Q1 2020 salary and wages? If "Yes", then no reduction based on reduction in salaries.

No

Total Reduction Based on Reduction in Salaries (Line 5) $(1,200)

Adjusted Expected Forgiveness Amount Before FTE Reduction (Line 6) $113,200

Has there been a reduction of employees or the average paid hours between January 1, 2020 and the end of the Covered Period? If "No", FTE Reduction Quotient should be 100%.

Yes

Were FTEs restored via rehire? If "Yes", FTE Reduction Quotient should be 100%. No

Reduction Based on Reduction of Number of Employees

Average FTE in Covered Period 3.7

Lesser of, Option #1 - 2019 Comparison Period or Option #2 - 2020 Comparison Period. Seasonal Employers Can Do either the 2019 Comparison Period, 2020 Comparison Period, or Seasonal Employer Period.

FTE Reduction Quotient (Line 7)

11.7

32%

Total Tentative Loan Forgiveness Amount (Line 8) $35,798

Covered Loan Amount (Line 9) $200,000

Payroll Cost 75% Requirement (Line 10) $125,867

PPP Loan Forgiveness Amount - Minimum of Tentative Loan Forgiveness Amount, Covered Loan Amount, and Payroll Cost 75% Requirement (Line 11)

$35,798

Document Submission to Lender


Payroll

Bank account statements or third-party payroll service provider reports

documenting the amount of cash compensation paid to employees

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

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

Document Submission to Lender (Cont’d)


FTE Documentation showing (at the election of the Borrower):

- the average number of FTE employees on payroll per month employed by the Borrower between

February 15, 2019 and June 30, 2019;

- the average number of FTE employees on payroll per month employed by the Borrower between

January 1, 2020 and February 29, 2020; or

- 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 the chosen reference period

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

Document Submission to Lender (Cont’d)


Nonpayroll

Documentation verifying existence of the obligations/services prior to

February 15, 2020 and eligible payments from the Covered Period:

- 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

- 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

- 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

Document to Maintain but Not Submitted


PPP Schedule A Worksheet or its equivalent and the following: - Documentation supporting the listing of each individual employee in PPP Schedule A Worksheet

Table 1, including the “Salary/Hourly Wage Reduction” calculation, if necessary

- 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

- Documentation regarding any employee job offers and refusals, firings for cause, voluntary

resignations, and written requests by any employee for reductions in work schedule.

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

All records relating to the Borrower’s PPP loan, including - documentation submitted with its PPP loan application, documentation supporting the Borrower’s

certifications as to the necessity of the loan request and its eligibility for a PPP loan

- documentation necessary to support the Borrower’s loan forgiveness application, and

- documentation demonstrating the Borrower’s material compliance with PPP requirements

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

Takeaways

• PPP Loan Forgiveness rules and calculations are a challenge to understand for even experienced finance professionals.

• Borrowers must submit applications to Lenders. • Borrowers may also complete applications electronically through their lender. • There will be many, many questions from borrowers. • October 31, 2020 is the deadline for Loan Forgiveness Applications • The first date that PPP Loan Forgiveness Applications can be filed is June 5th. • May the Force be with You

Questions?
