Updated PPP Rule on Loan Forgiveness Provisions
Dear WANADA Members,
Section 2 of the interim final rule codifies the process for seeking loan forgiveness, including reiterating what we've already learned from the
robust FAQ page that the U.S. Treasury Department has produced and revised. Namely, it explicitly states that borrowers may exclude any employee who declined a good-faith offer to be rehired when they calculate any overall salary reductions that have occurred since receiving the funds.
In Section 3, the guidance affords borrowers a new way to calculate the eight-week period in which they are using PPP funds. Borrowers are allowed to use an eight-week period that begins on the first day of the first pay period after the funds were received; previously, there had been some belief that the eight-week window began only on the day that the funds were deposited into the borrower's bank account.
Part (b) of Section 3 clarifies that hazard pay and commission payments to furloughed workers are allowed to be part of the forgiveness amount, along with regular salary, wage, and health care premium contribution expenses, so long as they do not exceed an annualized total of $100,000 per employee.
Section 4 also outlines non-payroll expenses that are eligible for forgiveness, and these align with past guidance published by the SBA and Treasury. Important to note that these guidelines do not alter two of the major components of the PPP: that borrowers must use the expenses to cover an eight week period of time, and that 75 percent of the forgiven funds must be used on expenses defined as payroll costs.
We encourage you to review the interim final rule with your financial advisor, and to also be aware of
an additional rule that covers the baseline instructions for applying for loan forgiveness. We do not believe that these rules mark any sort of departure from the status quo for the vast majority of PPP borrowers, but we wanted to keep you informed that they have been published.
As always, please let me or Joe Koch (
jk@wanada.org) know if you have any questions.
Sincerely,
