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.
For more details on your loan, see our Paycheck Protection Program Loan Guide FAQ blog post or our video on the PPP Loan forgiveness calculation.
Check out our COVID-19 resource page for more blog posts, videos and helpful information for businesses during the Coronavirus pandemic.