We have all been anxiously awaiting for the SBA to clarify the PPP forgiveness process. On Friday, May 15th the SBA released the forgiveness application (found below) which outlines the process and documentation for forgiveness. This application and the guidance included has proved to be very favorable for our clients.
- All interest on real and personal property are included as a forgivable expense. For those of you that have deferred payments on notes, you will need to make an interest only payment during your covered period in order to seek forgiveness on this amount.
- Retirement contributions are included and do not appear to be capped for Owners at the $100,000 total compensation level. You should restart your 401(k) and Cash Balance plan contributions (if applicable) and make profit sharing contributions during your covered period.
- “Incurred and paid” expenses has been clarified to include those expenses paid during your covered period. If you have deferred your rent obligations consider paying your rent through your covered period and ask your landlord to defer after your covered period.
- The June 30th Safe Harbor for full-time equivalent (FTE) employees is in effect. If your employee count was reduced, as long as the full-time equivalent count is back up to its previous levels on June 30th you will not be penalized for any reduction in FTEs for your forgiveness calculation.
Based upon the guidance provided in the application and instructions, we suggest that all clients wait to complete and submit the forgiveness application until at least after June 30th or perhaps even later as we expect the application and the possible rules to change over the course of the next few months as the HEROES Act is considered for Congressional approval. For now, simply use this application as a guide to gather information for your future application and how to consider how to work with your CPA to complete the application