Late in the day on May 22, 2020, the Small Business Administration (SBA) in conjunction with the Department of Treasury issued the long-awaited guidance on requirements for Paycheck Protection Program loan forgiveness. Unfortunately, it clarified very little and included very little new information.

Two of the largest outstanding questions remain unanswered. However, currently there are 3 bills between the House and Senate to both extend the 8-week period to 16 or 24 weeks and to eliminate the rule that 75% of the funds must be spent on payroll costs. We expect some action, possibly this week, on those bills.

New or clarified information gleaned from the most recent guidance is as follows:

  • Bonuses and hazard pay qualify for forgiveness as part of total payroll.
  • Forgiveness totals will not be reduced for both hours and wage reductions for the same employees. “To ensure that borrowers are not doubly penalized, the salary/wage reduction applies only to the portion of the decline in employee salary and wages that is not attributable to the full time equivalent (FTE) reduction.”
  • Forgiveness for retirement and health care contributions for owner-employees are capped by 8/52 of the amount of their 2019 retirement and health care contributions.
  • Borrowers must apply for forgiveness no later than October 31, 2020.
  • Lenders will have 60 days from receipt of the completed loan forgiveness application to determine the amount of loan forgiveness.
  • SBA will have 90 days to review the loan forgiveness application after receiving it from the bank.

We are still hoping to get more clarifications through the SBA’s FAQ system. As soon as more relevant information becomes available, we will send more updates. In the meantime, Eder, Casella & Co. is here to help with your individual situation and to help you through the forgiveness application process.


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