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FTE Impact on Loan Forgiveness & Documentation for PPP Loan Forgiveness

It is my understanding you may choose to either use an 8 week or a 24 week reporting period. If you have used all of your PPP monies for forgivable expenses I suggest submitting your forgiveness request as soon as your 8 week reporting period is completed. However if you have not yet used substantially all of your PPP monies for covered expenses I would suggest considering a 24 week reporting period while keeping in mind the impacts of FTE’s (Full Time Equivalents) through 12/31/2020.

As long as your FTE levels do not fall or you can rehire employees by 12-31-2020 we should not have our forgiveness levels decreased. Please be reminded employees fired for cause and employees to whom we make a bonafide offer who opt not to return to work do not count against you for FTE calculation purposes.

If you have reductions in FTE levels during the covered period, you can consider rehiring employees by December 31, 2020, to help maximize loan forgiveness. If any reduction of FTE’s occurred from February 15 and you fully restore the FTE level by December 31, 2020 to equal or higher than FTE’s as of February 15, 2020, your loan forgiveness will not be reduced by any FTE reduction during the covered period. Please be reminded the FTE reduction and salary reductions impact both the 8 & the 24 week forgiveness amounts.

The CARES Act provided that, to apply for forgiveness, the borrower is required to submit the following documentation to the lender that is servicing the PPP loan.

Documentation verifying the number of FTEs on payroll and pay rates for the applicable pay periods, including payroll tax filings reported to the IRS (Form 941) and state income, payroll, and unemployment insurance filings.

Documentation, including cancelled checks, payment receipts, transcripts of accounts, or other documents verifying payments on covered business mortgage obligations/including copy of mortgage, covered lease obligations and rental agreements, covered utility payments and amounts the employer pays towards health insurance (net of any amounts paid by employees).

Thanks and be safe!