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This will allow employers to cover more payroll cycles and spread the funds out over a longer period as economic hardships continue into the second half of the year. Calculate reductions in your FTEs; For each employee, find out the average number of hours paid per week from either the Covered Period or the Alternative Payroll Covered Period, divide by 40 and round that number to the nearest tenth, with each employee capped at 1.0 (meaning overtime work does not count toward FTE). PPP Loan Forgiveness Eligible Time Frame The borrower’s Covered Period runs from Monday, April … FAQ No. be the period beginning on 2/15/20 and ending on 12/31/20, effective 3/27/20. The Act also reduced the forgivable amount that needed to be used for payroll to 60% of the loan (from 75%). Loan proceeds must be used within 24 weeks of the date they have been disbursed (but not later than December 31, 2020). They can elect to calculate payroll costs using the eight-week (56-day) period that starts on the first day of the first pay period following the PPP loan disbursement date. Loan proceeds must be used within 24 weeks of the date they have been disbursed (but not later than December 31, 2020). 1. Note 1: Eligible wages How to Apply for Loan Forgiveness. In no event may the Covered Period … if the borrower received its PPP loan before June 5, 2020, the borrower may elect to use an eight-week (56-day) Covered Period. Can a business pay interest on non-mortgage debt during the covered period and have it forgiven? The PPP Flexibility Act extended this period to 24 weeks (168 days) or December 31, 2020, whichever is earlier. Members have 10-months to apply for forgiveness after the last date of their chosen covered period. Choose a Covered Period Length for your report, either 8 weeks or 24 weeks. A borrower received its loan before June 5, 2020, and elects to use a 24-week Covered Period. Question: How is the maximum PPP loan amount calculated for eligible nonprofit organizations 3 (up to $10 million)? The amount of a PPP loan that is forgiven is generally reduced if the borrower cuts back on the number of "full-time equivalent" (FTE) employees during the 24-week covered period. Thank you for visiting our PPP Loan Forgiveness Calculator! For example, if you use your PPP to cover payroll for the 8-week covered period, you cannot use a different SBA loan product for payroll for those same costs in that period, although you could use it for payroll not during that period or for different workers. 3. If you don’t apply for forgiveness, your payments could be deferred for up to 16 months – the deferral period has been extended for 10 months following whichever date occurs first – the date that is 24 weeks after your loan was funded, or December 31, 2020. Similarly, eligible payroll costs incurred but not paid during the eight-week period are covered if paid on or before the next regular payroll date. The loan forgiveness covered period is the period beginning on the date the lender disburses the PPP loan and ends on any date selected by the borrower that occurs during the period 8 weeks after the loan disbursement date and 24 weeks after the loan disbursement date (whichever time period is chosen, referred to as the "Covered Period" herein). SBA is implementing the formula change with respect to first draw and second draw PPP loans that are approved after the effective date of the rule (March 3). News May 14, 2020 at 02:27 PM Share & Print. Potential forgiveness amount (add lines 1-4) Loan amount. If you received your loan before June 5, 2020, you can select either an 8-week or 24-week covered period from the day you received your funds to spend it on qualified expenses. Example 4: Harte’s Knave Casino Group, LLC received a PPP loan and had an 8-week Covered Period. Business Rent or Lease Payments Calculate Your PPP Loan Amount The maximum amount of money you can borrow through the PPP is equal to 2.5 times your average monthly payroll costs or $10 million, whichever is lower. PPP Forgiveness Calculator This tool is designed to help you better understand the timing for your respective “Covered Period” and “Deferral Period” based on the date your loan was funded (the date funds were disbursed to you). The eight-week covered period under PPP should align with the beginning of a pay period, not the date loan proceeds are received. The Covered Period. The 8-week covered period under PPP should align with the beginning of a pay period, not the date loan proceeds are received ... Because the CARES Act does not define how to calculate a … beginning on the first day of the first pay period following the PPP loan disbursement. It extended the covered period of loan forgiveness from 8 weeks to 24 weeks after the date of loan disbursement. The 8-week (56-day) period beginning on the PPP Loan Disbursement Date if you received your PPP loan before June 5, 2020, and elect to use an eight-week (56-day) Covered Period. A new Interim Final Rule (IFR) from the U.S. Small Business Administration (SBA) supports the use of bonuses and hazard pay and solidifies use of Paycheck Protection Program (PPP) loan proceeds for costs paid or incurred during the Covered Period, but it also adds a new owner-employee concept. Borrowers can choose a covered period of any length between 8 or 24 weeks beginning on the date the borrower received the loan proceeds. Monthly payments of principal plus interest will begin after the deferral period. If a PPP loan received an SBA loan number before June 5, 2020, the loan has a two-year maturity unless the borrower and lender mutually agree to extend the term of the loan to five years. • Previously, the “covered period” ended on 6/30/20; extending the similarly named but different “Covered Period” for forgiveness calculations from 8 to 24 weeks from the origination date of a PPP loan. The “loan forgiveness covered period” is the period beginning on the date the lender disburses the PPP loan and ending on any date selected by the borrower that occurs during the period (i) beginning on the date that is 8 weeks after the date of disbursement and (ii) ending on the date that is 24 weeks after the date of disbursement. Borrowers can receive two and a half times their average monthly payroll costs (excluding compensation in excess of $100,000 per employee) incurred 12 months before the date the loan is made (some lenders are simply using 2019 numbers). Divide by 40 and round to the nearest tenth to get your FTE calculation. [5] A lookback period, in this context, is used to compare the expenses in the covered period to what is normal for a typical business, and determine if it is a reasonable amount. For PPP loans distributed in 2021, the SBA has not released any information on a potential grace period for rehiring employees. For example, for an 8-week Covered Period, the maximum is $15,385, for a 24-week Covered Period, the maximum is $46,154. 5. Borrowers who received their loan before June 5, 2020 may elect to have the loan forgiveness covered period be the 8-week period beginning on the date its PPP loan was disbursed. Maintain full-time equivalent employee levels or restore those levels by June 30, 2020. Calculate which period has the lowest FTEs: February 15, 2019 to June 30, 2019, or January 1, 2020 to February 29, 2020. Whichever period has the lowest FTEs, you should try to maintain levels as close as possible to that number during the Covered Period. The PPP Loan Forgiveness Application creates an alternative eight-week period (Alternative Payroll Covered Period or APCP) that Borrowers with a biweekly (or more frequent) payroll schedule may elect to use to calculate payroll costs eligible for forgiveness. The original PPP loan program and loan forgiveness rules required the entrepreneur to spend PPP funds during an eight-week "covered period" beginning on the date of loan disbursement. For small business owners that applied for the Paycheck Protection Program (PPP) and are using the shorter 8 week covered period, now is the time to consider your PPP loan forgiveness application. If you elect to use the 12-week period in May through September to calculate the PPP loan amount, you must also use the same 12-week period as the reference period ... attributable to space rented by the PPP borrower. FREE ACCOUNT. Determine the Covered Period that you use will to determine eligible payroll and non-payroll costs – the Covered Period starts on the date of the PPP loan disbursement and ends on a date selected by you that is between 56 days (8 weeks) and 168 days (24 weeks) following the disbursement date 3. B) Determine Your Reference Period: This period is used to compare the Covered Period to. Employees who worked for the borrower during the Covered Period or Alternative Payroll Covered Period and who earned less than $100,000 in 2019 are listed in Table 1. on the PPP Schedule A Worksheet. Lender account statements, from February 2020 and the months of the covered period through one month after the end of the covered period, verifying interest amounts and eligible payments. You have up to 10 months after your covered period ends to apply for forgiveness. The “covered period” is extended to 24 weeks; businesses now have up to 24 weeks to spend their PPP funding (extended from 8 weeks) Current PPP borrowers can opt to extend the eight-week period to up to 24 weeks, or they can chose the original eight-week period The “Loan Forgiveness Covered Period” is the period beginning on the date the lender disburses the loan proceeds and ends on any date selected by the borrower that occurs from 8-24 weeks after the date of disbursement. First Draw PPP Loans made to eligible borrowers qualify for full loan forgiveness if during the 24-week covered period following loan disbursement: Employee and compensation levels are maintained. For example, if you have 3 employees who consistently worked 20 hours a week, altogether they would count as 1.5 FTE. For purposes of loan forgiveness, the “covered period” is the 8-week period beginning on the date the PPP loan funds are disbursed. For example, if the Borrower is using a 24week Covered Period and received its PPP loan proceeds on Monday, April 20, - the first day of the Covered Period is April 20 and the last day of the Covered Period is Sunday, October 4. A payroll statement or similar documentation from the pay period that covered February 15, 2020 must be provided to establish you were in operation and had employees on that date. If borrowers do not apply for forgiveness within 10 months after the last day of the covered period, then PPP loan payments are no longer deferred and borrowers will begin making loan payments to their PPP lender. by Jeff Berman. 7. This will allow employers to cover more payroll cycles and spread the funds out over a longer period as economic hardships continue into the second half of the year. To calculate each FTEE, divide the average number of hours paid per week during the loan period by 40 and round the total to the nearest tenth, with a maximum of 1.0. For seasonal businesses, the applicant may use average monthly payroll for the period between February 15, 2019, or March 1, 2019, and June 30, 2019. PLEASE NOTE: These spreadsheets are locked to maintain the integrity of the formulas. applicable Covered Period (for example, for a 24-week Covered Period, this cap is $46,154) • All employer state and local taxes paid on employee gross pay, such as state unemployment insurance and employer-paid state disability insurance (in applicable states) • Employer health care and group insurance benefits, including insurance premiums • In no event may the covered period extend beyond December 31, 2020. Many small businesses have inquired about whether they can apply for PPP loan forgiveness before their covered period expires. 5. However, many Borrowers have payroll periods that do not align with this 8-week covered period. Payroll cost 60% requirement (divide line 1 by 0.6) Forgiveness amount (the smallest of lines 5, 6, and 7) There are many similarities between the EZ Form and the revised full application. any time up to the maturity date of the loan. PPP loans are getting a second life. Covered Period: Enter the eight-week (56-day) Covered Period of your PPP loan. The first day of the Covered Period must be the same as the PPP Loan Disbursement Date. week (56 day) covered loan period. Lines 1 to 4 are the same, while lines 6 to 8 on the EZ Form match lines 8 to 11 in the full form. Strategies to Help Maximize Paycheck Protection Program (PPP) Loan Forgiveness If … First Draw PPP Loan forgiveness terms. The Covered Period Start Date is usually the PPP loan disbursement date, but borrowers with a biweekly (or more frequent) payroll schedule can also elect the first day of the first pay period following the PPP loan disbursement date. Add your full-time FTE and your part-time FTE to get your total FTE figure. Businesses with PPP funds can opt to use the 8-week period or spend the funds over a 24-week period. Borrowers are eligible for loan forgiveness for the You can choose a covered period of any length between 8-weeks (56 days) and 24-weeks (168 days), beginning on the date you received the loan proceeds. https://onpay.com/payroll/calculator-tax-rates/ppp-loan-forgiveness-calculator Payroll costs 1.1. At least 60 percent of the proceeds are spent on payroll costs. Your loan forgiveness covered period generally begins on the date you received your PPP funds (or if you received them on more than one date, the first date you received PPP funds), and ends on a date selected by you between 8 to 24 weeks thereafter. The unforgiven portion of a PPP … The total costs cannot exceed 40% of the total forgiveness amount. the eight-week period (56 consecutive days) that begins on the date the borrower received PPP loan funds (Covered Period), or ... employer state and local taxes assessed on employee compensation for the Covered Period or the Alternative Payroll Covered Period to calculate the Total Payroll Costs. Lender account statements, from February 2020 and the months of the covered period through one month after the end of the covered period, verifying interest amounts and eligible payments. Get an estimate of how much of your Paycheck Protection Program loan will be forgiven. Borrowers may spend up to 40% on other qualified expenses during the covered period. The covered period begins on the date the lender makes the first disbursement of your PPP loan. The Covered Period. Additionally, using an approach that 8-week covered period on April 1 or April 16. The covered period is the period in which loan funds must be used to qualify for loan forgiveness. Terms of a PPP Loan. Covered Period and paid on or before the next regular billing date, even if the billing date is after the Covered Period. It is not necessary to obtain the password to use these documents. PPP Schedule A Worksheet, Table 2 Totals Line 4. If you received your PPP funds before June 5, 2020, you can choose to use either an 8-week or 24-week Loan Forgiveness Covered Period. PPP Loan Forgiveness Estimator. Business Rent or Lease Payments Note that there is a limit to the cash compensation any individual employee can be paid during this forgiveness window ($100,000 prorated over the number of weeks in your Covered Period). Schedule A Worksheet, Table 1 during the Covered Period or the Alternative Payroll Covered Period was at least 75% of such employee’s average annual sala . 49 states that if a PPP loan received an SBA loan number on or after June 5, 2020, the loan has a five-year maturity. What happens to the portion of the PPP Loan that is not forgiven? Payroll Costs Incurred, But Not Paid. Tip: If you are using an online date calculator, remember to count the date of the disbursement of the loan as part of the 168 days. Must be paid during the covered period OR incurred during the covered period AND paid on or before the next regular billing date. The first day of the Covered Period must be the same as the PPP Loan Disbursement Date. There are at least five scenarios where your loan forgiveness could be reduced: 1. Under the CARES Act, employers can choose between two lookback periods: either February 15, 2019 to June 30, 2019; or January 1, 2020 to February 29, 2020. While the SBA did not address all of the … Note that under the PPP rules, the last day a Covered Period for loans made in 2020 can end is 12/31/2020, even if the timing of loan document execution and funding would result in a 24-week period ending after year-end. This has now been revised, and the borrower may elect any covered period between 8 and 24 weeks after the receipt of funds to be the “covered period.” ** How Forgiveness May be Reduced . The government’s efforts to help businesses have resulted in generous terms for PPP loans. ry or hourly wage between January 1, 2020 and March 31, 2020, check here ☐ and enter 0 on line 3. cannot use your PPP loan for the same purpose as your other SBA loan(s). Answer: For a Second Draw PPP Loan amount of $150,000 or less, the borrower must provide documentation substantiating the reduction in gross receipts before or at the time For example, if you are using a 24-week covered period and received your PPP loan proceeds on Monday, April 20, the first day of the covered period is April 20 and the last day of the covered period … If you received your PPP funds on or after June 5, 2020, your Loan Forgiveness Covered Period is 24 weeks. ; A second new IFR from the SBA stipulates lender requirements if the SBA is … Clarifies the timing of when a PPP … As a result, borrowers may calculate eligible payroll costs using the 24-week period that begins on the first day of the pay period after loan disbursement, rather than the first day of disbursement. Comerica’s review of your application must be complete by the date shown above per PPP … The Covered Period begins on the origination date of your PPP loan — which is also the date HSBC disbursed the funds to you — and ends on a date you select that is between 8 and 24 weeks after the date your loan was disbursed. For example, if the borrower is using a 24-week Covered Period and received its PPP loan proceeds on Monday, April 20, the first day of the Covered Period is April 20 and the last day of the Covered Period is Sunday, October 4. Your covered period starts on the date your PPP loan funds are disbursed and ends on any date of your choosing that is between 8 and 24 weeks from the disbursement date. Alternative Payroll Covered Period, which ranges from 8 to 24 weeks beginning on the first day of the payroll period beginning after the date of your loan disbursement. The Covered Period and Alternative Covered Period. Borrowers are eligible for forgiveness of payroll costs paid and … Step 2: Subtract the total amount of salary/hourly wage reductions from this number. The time period to calculate the payroll cost is the applicant’s choice between the previous 12 months or calendar year 2019. Funds must be used for eligible costs incurred during the covered period. Using this approach, rather than beginning the covered period when funding is received, will provide borrowers more opportunity to use the PPP funds for their primary purpose – keeping employees on the payroll. Or Copy of lender amortization schedule and receipts, or cancelled checks verifying eligible payments from the covered period. For example, if the Borrower received its PPP loan proceeds on Monday, April 20, the first day of the Covered Period is April 20 and the last day of the Covered Period is Sunday, June 14. First Draw PPP loans made to eligible borrowers qualify for full loan forgiveness if during the 8- to 24-week covered period following loan disbursement: The loan proceeds are spent on payroll costs and other eligible expenses; and. Or Copy of lender amortization schedule and receipts, or cancelled checks verifying eligible payments from the covered period. The following costs are eligible for loan forgiveness: 1. Question: I am an applicant for a Second Draw PPP Loan amount of $150,000 or less. • For example: if the borrower is using a 24-week covered period and received its PPP loan proceeds on Monday, April 20, the first day of the covered period is April 20 and the last day is Sunday, October 4. AICPA Creates PPP Loan Forgiveness Calculator. This limitation will be applied in the "PPP Forgiveness Calculator" tab. The PPP loan was originally intended to cover an 8 week period of time to help your business manage payroll costs and other essential business expenses. The lender should disburse the loan no later than 10 calendar days from the date of loan approval. One condition to getting your Paycheck Protection Program loan completely forgiven is proving that you maintained the same number of FTEs (full-time equivalents) during the 24-week PPP period as before COVID-19. the above date ranges or for any consecutive 12-week period between May 1, 2019, and September 15, 2019. To qualify for forgiveness, loan proceeds must be used during the Covered Period, defined in the instructions as the eight-week (56-day) period commencing upon the date the loan is disbursed. When do I need to provide the documentation to substantiate the reduction in gross receipts? The coverage period begins on the date the lender makes the first disbursement of the PPP loan to the borrower. The PPP was created by the CARES Act to provide forgivable loans to eligible small businesses to keep American workers on the payroll during the COVID-19 pandemic. The Safe Harbor period ends on December 31, 2020 for borrowers who received their PPP loan prior to August 8, 2020, and on the last day of the chosen covered period for borrowers who received their PPP loan or Second Draw PPP loan in or after December 2020. 6. Any PPP recipient that received their loan prior to June 5 can choose to keep their loan covered period at the original 8 weeks or can elect to choose the new covered period of 24 weeks. In no event may the Covered Period extend beyond … Payroll costs incurred and payments made during the “covered period” are eligible for forgiveness. X. The FAQs also clarified that a seasonal employer that elects to use a 12-week period between May 1, 2019 and September 15, 2019 to calculate its maximum PPP loan amount must use the same 12-week period as the reference period for calculation of any reduction in … Limited Clarifications on the Definition of Payroll Costs. In order to calculate your forgiveness amount you need to take the following steps: Step 1: Record the sum of your (1) Payroll costs, (2) Mortgage Interest payments, and (3) Utility costs. ACCESS. 2. For PPP loans distributed in 2020, any rehiring must have been done before December 31, 2020. **At least 60% of the PPP loan proceeds must be spent on payroll costs, regardless of timing. The covered period is the period of time you have to spend your loan proceeds on eligible PPP costs. At least 60% of the proceeds are spent on payroll costs. Please read the instructions in the worksheet which indicate how to use the resources as intended. The SBA allows you to choose any covered period from 8 weeks (56 days) to 24 weeks (168 days), beginning on the date you received your loan proceeds. SBA is implementing the formula change with respect to first draw and second draw PPP loans that are approved after the effective date of the rule (March 3). The eight-week period should be flexible, with businesses able to choose to commence it once stay-at-home restrictions are lifted instead of … Costs incurred during the covered period, but paid after the period are eligible for forgiveness. Period. If an expense is not paid during the Covered Period, or is incurred but not paid by the first regular billing date thereafter, it will not be eligible as a paid or incurred expense. “For example, if a borrower had 10.0 FTE employees during the reference period and this declined to 8.0 FTE employees during the covered period, … As of now, any rehiring must be done before the end of your covered period. PPP Loan Forgiveness Eligible Time Frame The loan proceeds are spent on payroll costs and other eligible expenses (see below).