May 28, 2020
Posted Under: COVID
It’s hard to believe, but it’s been eight weeks since the Paycheck Protection Program began. If you would like the PPP funds to be a grant instead of a loan, it’s time to prepare to apply for PPP forgiveness.
Please note Congress is currently debating possible extensions to the PPP program, but as of today, nothing is finalized. The highlights in this post are based on current PPP guidance.
The PPP forgiveness application can be found here. The recently released PPP forgiveness guidance can be found here. Find a quiet moment to dive into these documents. They are lengthy but important and worth the read. Here are some highlights:
The full amount of your PPP loan may be eligible for forgiveness if you meet the forgiveness conditions.
- Spend all of the funds within 8 weeks (56 days) of fund disbursement.
- Spend at least 75% of the funds on eligible payroll expenses.
- Maintain your pre-COVID 19 employment and compensation levels.
- Spend up to 25% on eligible non-payroll costs:
- Interest on business mortgage
- Business rent
- Business utilities (electricity, gas, water, transportation, telephone or internet)
Complete the PPP Forgiveness Application and submit it to you lender. Your lender has 60 days to determine your forgiveness.
- Payroll costs may be paid or incurred during the 8 week period. (If your organization operates on a bi-weekly or more frequent payroll, you may opt to use an Alternate Payroll Covered Period which will begin on the first day of the first regular payroll cycle after disbursement.)
- You must maintain pre-COVID employment levels. If you had to furlough or lay off employees, you can re-hire them by June 30 without penalty.
- If you offer to re-hire an employee and they refuse your offer, document both the offer and refusal in writing. You must also report the employee to the Alaska Office of Unemployment Insurance for refusing to return to work within 30 days of refusal. If you can document all these steps, your forgiveness will not be impacted by a reduction in employee levels.
- You must maintain pre-COVID employee compensation levels or not reduce them by more than 25% to qualify for full forgiveness. If you have reduced an employee’s compensation by more than 25% and not returned it to pre-COVID levels by June 30, your forgiveness will be reduced.
If you have questions about PPP forgiveness, please feel free to contact us. We’ll do all we can to assist you.