This video acknowledges 5 questions that the Numberwise team (mainly Andy) and our clients have been wondering about PPP loan forgiveness. While we don’t have answers yet, Andy shares some thoughts to avoid over-spending for your business.
Highlights from Video
1. Cash vs. accrual method for calculating expenses
Starting at :58 in video
We do not yet know if you are required to use the “cash” (payments made) or “accrual” (costs incurred) for calculating expenses during the 8 week period after you receive your loan funds. While forgiveness is based on “costs incurred and payments made,” what is the limit?
- For example, if funds are received on a Thursday but payroll is the following day for the prior two week period, would that be forgiven?
- If you prepay rent for the month after your eligibility period ends, would that be forgiven?
2. Reduction for employee decrease
Starting at 3:32 in video
- Can you replace two 15 hr/week employees with one FT employee without penalty, as the FTE didn’t change? (Please note: the PPP loan forgiveness application uses a 40 hour week to calculate an FTE.)
- If an employee doesn’t return, can you replace them with a friend or relative to increase your headcount?
3. Reduction for wage decrease
Starting at 5:30 in video
If an employee doesn’t return, are they included in the calculation?
4. Exemption for re-hires
Starting at 8:03 in video
How long do these “corrections” have to last?
5. Leftover funds after June 30
Starting at 9:17 in video
Funds left over on June 30 – can any money be used after June 30th? Some people want to use the funds as a low-cost loan after the eligibility period ends. We don’t know if you will be required to repay the surplus immediately, but it’s certainly a possibility until we receive more guidance.
Check out our COVID-19 resource page for more blog posts, videos and helpful information for businesses during the Coronavirus pandemic.