PPP News – Potential Extension

1. The FTE Calculation is defined on page 7.
   • The exact wording is as follows: “For each employee, enter the average number of hours paid per week, divide by 40, and round the total to the nearest tenth. The maximum for each employee is capped at 1.0. A simplified method that assigns a 1.0 for employees who work 40 hours or more per week and 0.5 for employees who work fewer hours may be used at the election of the Borrower.”
   • A report to help track the FTE counts will be available for payroll customers within the next week.
2. FTE Reduction Safe Harbor is defined on page 8
   • The exact wording is as follows: “Specifically, the Borrower is exempt from the reduction in loan forgiveness based on FTE employees described above if both of the following conditions are met: (1) the Borrower reduced its FTE employee levels in the period beginning February 15, 2020, and ending April 26, 2020; and (2) the Borrower then restored its FTE employee levels by not later than June 30, 2020 to its FTE employee levels in the Borrower’s pay period that included February 15, 2020.”
3. Owner Pay cap is further defined on page 5. Note the underlined portion below. This information had not been included in prior PPP documents from the SBA.
   • The exact wording is as follows: “Enter any amounts paid to owners (owner-employees, a self-employed individual, or general partners). This amount is capped at $15,385 (the eight-week equivalent of $100,000 per year) for each individual or the eight-week equivalent of their applicable compensation in 2019, whichever is lower.”
4. Covered Period or Alternative Payroll Covered Period on page 1
   • There are now two periods that can be used for the purposes of completing the forgiveness application.
   • The covered period is the 56 day period beginning with the first disbursement date. “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.”
   • “For administrative convenience, Borrowers with a biweekly (or more frequent) payroll schedule may elect to calculate eligible payroll costs using the eight-week (56-day) period that begins on the first day of their first pay period following their PPP Loan Disbursement Date (the “Alternative Payroll Covered Period”). For example, if the Borrower received its PPP loan proceeds on Monday, April 20, and the first day of its first pay period following its PPP loan disbursement is Sunday, April 26, the first day of the Alternative Payroll Covered Period is April 26 and the last day of the Alternative Payroll Covered Period is Saturday, June 20.”

*Please note that the following is not fully passed or implemented. It appears likely that it or a similar bill will pass soon though and we know that many borrowers are close to the end of the 8 week period following their loan disbursement, so we feel it is prudent to share about the potential change.

Yesterday, the House passed a bill, called the Payroll Protection Program Flexibility Act.  It would extend the 8 week forgiveness period to 24 weeks and make a number of other adjustments related to the Payroll Protection Program. Here is a CNBC article on the topic.

The Senate has a similar plan that will likely be voted on next week when they convene again. Many sources indicate that the Senate will vote on an extension to 16 weeks instead of 24.

We will be watching for new developments on the topic and we will share pertinent updates via email.