It is now 8-24 weeks after the loan is disbursed
- The compensation of an individual employee in excess of $100,000 on an annualized basis, as prorated for the period during which the payments are made or the obligation to make the payments is incurred,
- Any compensation of an employee whose principal place of residence is outside the United States;
- Qualified sick and family leave wages for which a credit is allowed under sections 7001 and 7003 of the Families First Coronavirus Response Act.
In general, payroll costs paid or incurred during the covered period are eligible for forgiveness. (More details of payroll expenses paid vs. incurred are listed in the FAQs below.) Salary, wages, or commission payments to furloughed employees, bonuses or hazard pay during the covered period may be eligible for forgiveness, provided they don’t exceed the $100,000 annual cap. (See the FAQs below for information on caps on owner-employee compensation.)Payments to independent contractors are not covered under the employer’s payroll. And payroll costs that are qualified wages taken into account in determining the Employer Retention Credit are not eligible for loan forgiveness.
Before we dive into the application, there are a couple of important questions you’ll need to be able to answer. Let’s tackle two of them right now.
What is the Covered Period?
The covered period we are referring to here is the time period you have to spend your loan funds for forgiveness purposes. (This applies to any PPP loan for which a loan forgiveness payment had not been remitted by SBA as of .) You payday loan stores in Dickson get to choose the number of weeks within that window, but it always is at least 8 weeks and begins when loan funds are disbursed (put into your bank account.) Note: You may see other periods listed in articles (or even used another period if you already applied for forgiveness for your first PPP loan). That’s because originally the CARES Act set that period at 8 weeks after the loan is disbursed. The PPP Flexibility Act passed in changed it to 8 or 24 weeks. Because payroll and other expenses don’t always fall neatly into those periods, the SBA also created an “Alternative Covered Period.” That’s now eliminated.
What are FTEs?
Another term you’ll see throughout the application is “FTE,” which stands for Full-time Equivalent or Full-time Equivalency. This is a calculation based on the number of hours an employee works.
Full-time equivalent (FTE) can take into account both full-time and part-time employees. The PPP Forgiveness Application explains how to calculate FTE for PPP loan forgiveness. Here’s what it says:
“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. For employees who were paid for less than 40 hours per week, borrowers may choose to calculate the full-time equivalency in one of two ways. First, the borrower may calculate the average number of hours a part-time employee was paid per week during the covered period. For example, if an employee was paid for 30 hours per week on average during the covered period, the employee could be considered to be an FTE employee of 0.75. Similarly, if an employee was paid for ten hours per week on average during the covered period, the employee could be considered to be an FTE employee of 0.25. Second, for administrative convenience, borrowers may elect to use a full-time equivalency of 0.5 for each part-time employee…Borrowers may select only one of these two methods, and must apply that method consistently to all of their part-time employees for the covered period and the selected reference period.”
