Many employers applied for and received Paycheck Protection Program (PPP) loans to help with payroll and other approved expenses. The advantage of this loan is its forgiveness aspect which can essentially transform it into a grant. Over the last two months, there have been many changes and tweaks to the PPP’s guidelines and for some companies, the eight-week period for using the funds is drawing to a close.
We viewed (several times, actually!) this excellent webinar from McDermott Will & Emery, which summarizes the current process for applying for PPP loan forgiveness. One big change occurred in the definition of full-time equivalents (FTE). Initially, the PPP considered an FTE someone who worked 32 hours per week; this has now changed to 40 hours per week. The change can affect the percentage of your loan’s forgiveness. Speaking of which, one good change is the ability to prorate the amount forgiven. So if an employer spends less than 75% of the funds on payroll and approved expenses, it can at least request forgiveness of some of the proceeds.
There is additional information on time periods, accrued vs. paid payroll expenses, and the documentation needed for forgiveness, so this webinar is truly a ‘must-see.’ You can access the forgiveness application here.
Update: On June 5, 2020, President Trump signed the PPPFA which changed some of the information in this blog. We suggest reading our blog that explains the PPPFA changes.