We wanted to provide you with additional information and clarification when it comes to the Paycheck Protection Program (PPP) Loan Forgiveness. If you have additional questions, please do not hesitate to reach out to your ATLAS office or contact us here.

Things to Know About the Loan Forgiveness:

Forgiveness is equal to the amount of qualifying expenses incurred and paid in the first 8-week period after origination of the PPP loan (the ”covered period”).

“Qualifying expenses” paid include:

  • Payroll costs (see lists below)
  • Non payroll costs
    • Rent payments
    • Mortgage interest (no principal payments)
    • Utility payments (electricity, gas, water, transportation, telephone or internet access)

Only 25% of the loan amount and loan forgiveness can be used to pay non-payroll costs.

Payroll Costs” are defined the same for loan forgiveness as in the loan calculation.

Payroll costs include:
  • Wages
  • Tips
  • Vacation, sick pay and severance
  • Group health benefits
  • Retirement benefits
  • State and local taxes on employee compensation
Payroll costs exclude:
  • Compensation in excess of $100,000 for an individual employee
  • Families First Coronavirus Response Act (FFCRA) paid leave

**Forgiven amounts are not taxable to the small business (i.e. a tax-free grant)

What Can Funds be Used For?

Funds from the PPP loans can be used for:

  • Payroll costs (see above)
  • Non payroll costs (see above)
  • Plus:
    • Interest payments on any other debt obligations that were incurred before 2/15/2020 (no principal payments)
    • Refinancing SBA Economic Injury Disaster Loans (EIDL)

When Does It Become a Loan (not forgiven)?

Any amount not forgiven converts to loan. If an amount becomes a loan:

  • No payments for 6 months
  • 2 years
  • 1% interest

Reductions in Forgiveness:

  • Reduction of total payroll costs – more that 25%
  • Reduction of total headcounts (FTE)
  • If both are restored to time of loan numbers by June 30, 2020, forgiveness can be restored

What do you need for documentation related to forgiveness?

An eligible recipient seeking loan forgiveness shall submit to lender:

  • Documentation verifying number of Full Time Employees (FTEs) on payroll and pay rates including:
    • Payroll tax filings
    • State income, payroll and unemployment insurance filings
  • Documentation including cancelled checks, payments receipts, transcripts, etc. verifying mortgage interest, rent, utilities and other debt interest payments
  • Certifications which represent:
    • The documents are true and accurate
    • The forgiveness was used to retain employees and make interest, rent and utility payments
  • Other documents required by SBA or lender

How Can ATLAS Help You?

  • Understand that planning is very important
  • Track the payments immediately
  • Calculate the forgiveness
  • Maximize the forgiveness
  • Use the loan for its intended purpose
  • Keep up-to-date with changes in the law and implementation of PPP Loans

Have additional questions or need assistance in the application process? Respond to this email or contact us here. As always, we are here for you.