Paycheck Protection Program 103: How Nonprofits Can ... · Covered Period The 8-week (56 day) period starting the day PPP loan funds hit your bank account. (Ex. Funds received April

Paycheck Protection Program 103:How Nonprofits Can Navigate the Forgiveness Process & Application

With Updates as of June 1, 2020Continue to Check SBA’s Website

This information is provided for general informational and educational purposes only and does not constitute legal, accounting or financial advice. Please note guidance is changing regularly. We encourage you to check with the SBA and your lender for updated guidance and check our FMA toolkit for updated materials.

Introduction to Audited What are we covering today?

1) What should we expect from the Application and the process?

2) What do we need to Collect, Calculate, and Complete for each section of the application?

3) What do we need to do post-forgiveness?

Introduction to Audited What We Assume You Know Or Could Read More About After Today

1) Details of Eligible Expenses for Forgiveness

2) Details of Expense Timing

(Paid and Incurred)

3) Importance of Maintaining FTEs

4) FTE Definitions

5) Covered Period Definitions

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Introduction to Audited Financial Statements

How do we reach FMA with additional questions and support on PPP after today?

Please reach out [email protected]

One of our experts will assist you with your questions as soon as possible

mailto:[email protected]

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What should we expect from the Application and the process?

Introduction to Audited Financial Statements

What are the steps for getting forgiveness?

Sample Process You Might See After Your Forgiveness Period Ends

Submit Forgiveness

Application & Documents to Your Lender

Gather Documents &

Complete Application

(May Be Online Portal)

Lender Sends to

SBA and SBA Reviews

Lender Notifies You

of Result within 60

Days

Lender Verifies Info & May Have Questions

Where Are We Awaiting More Guidance?

Will Congress extend the 8-week forgiveness period to 16 or 24 weeks, thus extending how much time you’ll have to spend down the funds and therefore when you’d be applying?

How long will you have to submit your forgiveness application once your forgiveness period is over?

What will online application forms and documentation requirements from lenders look like?

What kinds of reports will payroll companies create to make this easier for you?

How will the EIDL advance and/or loan be taken into account on PPP forgiveness?

How will organizations who want to request a forgiveness amount lower than their initial calculations lead to make sure they can do so? Examples:

You’re being reimbursed from restricted funding sources that covered the same exact expenses as PPP and you don’t want to double dip

You want to exclude the payroll and non-payroll expenses attributed to an affiliated (c)(4), (c)(6), or other nonprofit prohibited from applying for PPP

Let’s Dig Into the Application

https://home.treasury.gov/system/files/136/3245-0407-SBA-Form-3508-PPP-Forgiveness-Application.pdf

Take a breath. You’ve probably filled out more cumbersome grant applications. Or your own taxes. We’re here to break it all down.

https://home.treasury.gov/system/files/136/3245-0407-SBA-Form-3508-PPP-Forgiveness-Application.pdf

The Application Itself

11 Pages with Lots of Great Instructions But You’ll Only Submit 3 Pages to Your Lender + Some Back Up Documents

Page 3: PPP Loan Forgiveness Calc. Form

Page 4: Certifications & Signature

Page 6: PPP Schedule A

The Application ItselfHere’s Our Suggested Order for Filling Out:

Page 9: Top of PPP Schedule A Worksheet

Page 9: Finish Schedule A Worksheet

Page 6: PPP Schedule A

1 3

4Page 3: PPP Loan

Forgiveness Calc. Form5

2 Pages 7/8: If You Reduced Salary Levels or Hourly Rates

Page 4: Certifications & Signature6

What do we need to Collect, Calculate, and Complete for each

section of the application?

Ultimately Here’s What You Need to Calculate

Maximum Amount Eligible for

Forgiveness

Less Penalties

Forgiveness Amount

75% on Payroll Check

What Core Documents Do You Need to Collect First?

Payroll reports overlapping with your covered period (paid and incurred) listed by each employee showing cash compensation and employer paid state/local taxes. These reports, or others, will also need to show employee start date and last four of their social security number.

Reports or statements showing employer paid benefits showing health insurance as well as retirement (both excluding employee contributions)

Three reports listed by employee showing number of hours worked per week (i) during your covered period; (ii) between 2/15/19 – 6/30/19; (iii) between 1/1/20 –2/29/20. If you already know if (ii) or (iii) will show lower FTEs, just grab the lower one. For exempt employees, you will need to understand the standard number of hours they are paid for (e.g., 40, 32)

List of rent, lease payments for real or personal property and mortgage interest payments from arrangements in place before 2/15/20 that were paid or incurred during the covered period

List of utility payments paid and payments incurred during the covered period (electricity, gas, water, transportation, telephone, and internet access in service before 2/15/20)

What Other Documents Might You Need to Get Started?

Did you reduce salary level or hourly rates

in 2020? Gather the changes in

those rates between 1/1/20 – 6/30/20

Did you experience a staff reduction from 2/15/20 – 4/26/20 and then fully recover your

FTE count by 6/30/20?

Gather payroll or time tracking reports to understand the FTE count/# of hours worked per employee for

2/15/20 – 4/26/20 As of 2/15/20 As of 6/30/20

Will it be clear from other reports gathered who made

≤$100k annualized for all pay periods in 2019?

Gather a list of salaries as of 1/1/2019

Let’s Start With Page 9: Schedule A Worksheet

Table 1: List employees who: • Received compensation from the Borrower at an annualized rate of less than or equal to $100,000 for all pay periods in 2019 or were not employed by the Borrower at any point in 2019.

Look at the payroll reports listing all of your employees who were(1) employed at any point during your covered period and (2) whose

principal place of residence is in the US, and divide them up into two lists:

Table 2: List employees who: • Received compensation from the Borrower at an annualized rate of more than $100,000 for any pay period in 2019.

Name Last 4 SSN Cash Compensation Average FTE Salary/Hourly

Rate Reduction

Name Last 4 SSN Cash Compensation Average FTE

Top of Page 9 Tables 1 + 2: How do I calculate?

Cash Compensation

Sum of gross salary/wages paid or incurred during your covered period per employee including:• Salaries, wages, tips, commissions, bonuses, hazard pay,

furlough pay• Paid leave (vacation, family, medical or sick excluding leave

covered by FFCRA credits)• Allowances for dismissal or separation• Prorate the last payroll that overlaps with your Covered

Period if the paid date falls after your Covered PeriodKeep in mind, you must cap the sum at $15,385 per employee

To Calculate…. How to Calculate

Average FTE

Number of hours paid per employee for each of the weeks during the Covered Period – and take the Average

Mathematical Method: Total Hours Paid During 8 Weeks/40/8or

Simple Method: 1 FTE if paid for 40+ hours each week; ,5 FTE if paid for fewer than .5 FTE each week

Top of Page 9 Table 1: How do I complete?

Did you reduce that employee’s salary level or hourly rate in 2020?

Write 0

NO YES

See the Appendix to Determine How to Calculate or on Page 7 + 8 of SBA

Application

Salary/Hourly Rate Reduction Per Employee

Top of Page 9 Table 1: How do I complete?

Write 0

NO YES

Write Additional # of FTEs These Employees Would Have Represented

During the Covered Period

FTE Reduction Exceptions

Did any of the following happen and the relevant role was not filled by a new employee?

• Did you make a good-faith written offer to rehire an employee during the Covered Period and it was rejected?

• Was an employee fired for cause during the Covered Period? • Did someone voluntarily resign or request and receive a reduction of their hours

during the Covered Period?

Top of Page 9: Schedule A Worksheet

Sample of What Table 1 Might Looks LikeFeel free to Use our Estimator or Your own Excel

Bottom of Page 9: FTE Reduction Safe Harbor

Did you reduce the number of employees or average paid hours of your employees between Jan 1, 2020 and the End Of Your Covered Period?

Skip

NO YES

See the Appendix to Determine How to Calculate or

on Bottom of Page 9 of SBA Application

Moving On to Page 6: Schedule A

By completing the Page 9 Schedule A Worksheet, you’ll have most of what you need to complete the math on Schedule A, with just 3 new fields to fill in.

Time to bring those payroll and benefits reports and statements back out thatoverlap with your covered period (paid and incurred)

Line 6. Employer Contributions for Employee Health

Insurance

Line 7. Employer Contributions to

Employee Retirement Plans

Line 8. Employer State + Local

Taxes Assessed on Employee

Compensation

Employer Paid Medical + Dental + Vision Insurance Paid + Prorating the amount Incurred but not Paid

Employer Contributions Transferred to Employee Accounts + Prorating the amount Incurred but not Transferred

State and Local Payroll Taxes (e.g., SUTA) Paid + Prorating the amount Incurred but not Paid

Ignore and Type 0 in Line 9 – Not Applicable to Nonprofits

Learn More:

Almost Done → Page 3: Forgiveness Calculation Form

Fields GuidanceBusiness Legal Name Enter the same info. as on your original PPP Application Form.

DBA or Trade Name Enter the same info. as on your original PPP Application Form.

Business Address Enter the same info. as on your original Application Form, unless there has been a change in address

Business TIN (EIN, SSN) Enter the same info. as on your original PPP Application Form.

Business Phone Enter the same info. as on your original PPP Application Form.

Primary Contact Enter the same info. as on your original Application Form, unless there has been a change in contact

Email Address Enter the same info. as on your original Application Form, unless there has been a change in contact

SBA PPP Loan Number Enter the loan number assigned by SBA at time of approval. Request from your Lender if necessary.

Lender PPP Loan Number Enter the loan number assigned to the PPP loan by your Lender.

PPP Loan Amount Enter the disbursed principal amount of the PPP loan

PPP Loan Disbursement Date Enter the date the PPP loan funds hit your bank account


Fields Guidance

Employees at Time of Loan Application

Headcount (not FTEs) on the day you submitted your original loan application to your lender

Employees at Time of Forgiveness Application

Headcount (not FTEs) of all employees on the day you’re submitting your PPP application to your lender.

EIDL Advance Amount If you received an EIDL Advance, Enter the total amount of the EIDL advance (e.g., $10,000)

Payroll Schedule Select one or more frequencies of payroll you used during the loan period

Covered PeriodThe 8-week (56 day) period starting the day PPP loan funds hit your bank account.(Ex. Funds received April 20, 2020 + 55 days = June 14, 2020)

Alternative Payroll Covered Period, if applicable

Only fill in if not using the standard Covered Period. The 8-week (56 day) period starting the first day of the bi-weekly or weekly payroll that began after your loan was disbursed.

If Borrower Received PPP Loans in Excess of $2M

Based on your total approved principal amount. The SBA has indicated they will audit loans above $2M, including for the certification of need from the original application


By completing Page 6 Schedule A, you’ll have most of what you need to complete the Forgiveness Calculation Form, with just 3 new fields to fill in.

Grab your list of non-payroll expenses thatoverlap with your covered period (paid and incurred)

Line 2. Business Mortgage Interest

Payments

Line 3. Business Rent or Lease

Payments

Line 4. Business Utility Payments

Mortgage Interest Paid on Real or Personal Property on Obligations In Place by 2/15/20

+ Prorating the amount Incurred but not Paid

Rent or Lease Payments Paid on Real or Personal Property from Arrangements In Force by 2/15/20


Electricity + Gas + Water + Transportation + Telephone + Internet Paid from Services that Began by 2/15/20



Time to Bring All Of Our Hard Work Together. Last Calculations:

Pg. 6

No Separate Sheet – Just Add Here



From Pg. 6

Pg. 6

Finish Line→ Page 4: Certifications + Signature

Some highlights of what you will need to certify:

Your organization used it for allowable purposes

You factored in any workforce or wage reduction penalties

You were careful about your forgiveness calculations and submitted all proper backup. (This burden is primarily with you more than your lender)

If you knowingly use the funds for other purposes or mispresent the forgiveness amounts, this could lead to needing to returning the loan, fines up to $1M and/or fraud charges

Any other nuances to understand?

• If you’re being reimbursed from restricted funding sources that covered the same exact expenses as PPP and you don’t want to double dip, you’ll need to reduce your Line 11. Forgiveness Amount from Page 3 for the amount being reimbursed by other sources. Incorporating this adjustment before that calculation may cause very difficult calculations and may also reduce your forgiveness amount further than necessary.

• If you share employees and/or allowable operations expenses with another nonprofit that isn’t a (c)(3) or (c)(19), you’ll need to reduce your Line 11. Forgiveness Amount from Page 3 for the amount of expenses associated with those other entities.

• If you received sick and family leave credits covered by the Families First Coronavirus Response Act (FFCRA), you cannot include those leave credits in allowable Payroll Costs throughout the Application.

• If you are a seasonal employer, you can adjust the Average FTE comparison period used on the Schedule A, line 11 to be based on the average number of FTEs/month between any consecutive 12-week period between 5/1/2019 – 9/15/2019.

As always, check with your lender with questions on nuances to see how they’d like you to proceed

What documents do I submit to my lender?

See the Appendix (or SBA Application Page 10) for more details, but here are the highlights:

Bank account statements showing cash compensation paid or third-party payroll service provider reports

Payroll tax filings (Form 941) – not required for those using PEOs State quarterly (if appliable) and individual employee wage reporting and

unemployment insurance tax filings to each relevant state Payment receipts, cancelled checks, or account statements documenting the amount

of contributions to health insurance and retirement plans Proof of FTEs from comparison period Payment receipts, cancelled checks, or account statements documenting the amount

of expenses for mortgage interest, rent and utilities For mortgage interest: lender amortization schedule or lender account statements

from February 2020 and covered period For rent: copy of lease or lessor account statements from February 2020 and covered

period For utilities, copy of invoices from February 2020

What documents do I keep but don’t need to submit?

Keep all documents for 6 years, including:

Documentation supporting the listing of each individual employee in PPP Schedule A Worksheet Table 1, including the “Salary/Hourly Wage Reduction” calculation, if necessary (e.g., the work from page 7).

Documentation supporting the listing of each individual employee in PPP Schedule A Worksheet Table 2; specifically, that each listed employee received during any single pay period in 2019 compensation at an annualized rate of more than $100,000.

If applicable, documentation regarding any employee job offers and refusals, firings for cause, voluntary resignations, and written requests by any employee for reductions in work schedule.

If applicable, documentation supporting the FTE Reduction Safe Harbor from the Schedule A Worksheet

What do we need to do post-forgiveness?

What happens after we submit our paperwork?

• Lender will have 60 days to return the result of how much is being forgiven. Details on appeal process coming.

• Amy amount that is not forgiven continues as a loan at 1% APR to be paid back 6 months after the loan disbursement date. Principal and interest must be paid back within 2 years from the start of the day of loan disbursement.

• You can pay the balance back immediately without penalty (except for any interest that accrued)

• We believe it continues to be a conditional loan, but are awaiting more guidance. We do not know if the 75% on payroll requirement stays in place, but good to plan on that being the case.

• Loans above $2M will be subject to an audit from the SBA, but the SBA may review any loan, regardless of size, to review eligibility of the borrower, loan amount, and loan forgiveness amount.

What else do we need to do after forgiveness?

• Book revenue in your general ledger as Loan Forgiveness Revenue and reduce liability for the principal and interest forgiven

• Include in your internal and external financials, audit and 990

• Maintain documents for 6 years

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Appendix

When is the 8 Week Period for Forgiveness?

The primary purpose of the loan is to use it on allowable expenses during the 8 weeks following when you received it. The allowable spending you

have during this 8 weeks is what will count for forgiveness.

How To Define 8 Weeks aka 56 Days

The Covered Period is 8 weeks (56 days) starting with the loan disbursement date.

However, for administrative convenience, organizations can calculate eligible payroll costs using an Alternative Payroll Covered Period if they are on a bi-

weekly or more frequent schedule, delaying the start of their 8-week period to the first day of their first payroll following when the loan was disbursed. This is

not an option for semi-monthly or monthly payrolls.

Understanding The 8-Week Covered Period

Starting date: The day the lender makes the PPP loan disbursement.

Forgiveness “covered period:” 8 weeks

May be used for payroll; must be used for non-payroll expenses

8

weeks

Do we include the expenses paid during or incurred in the 8 weeks in our calculations?

The Application allows for both methodologies to be used.

*Bills fully incurred before the 8-week period that are paid in the ordinary course during the 8-week period areallowed. Pre-paid mortgage interest for after the 8-week period is not allowed. We are awaiting guidance on

how other pre-payments will be treated, but organizations should plan on them not being allowed.

Paid During* All of it Counts

Paid During & Incurred All of it Counts

Fully Incurred, Not Paid During But Is At Next Regular Due Date All of it Counts

Partially Incurred, Not Paid During But Is At Next Regular Due Date

Part of it Counts (Prorated)

NOTE: Payroll is PAID the day that paychecks are distributed or the ACH credit transaction is originated. Payroll is INCURRED on the day the employee’s pay is earned.

What Counts During the 8 Weeks Towards Forgiveness?

Example Covered Period: April 20, 2020 – June 14, 2020 For Payroll Costs

April 20 – June 14

SBA may provide further guidance as there are some

alternative ways to read their application

KEYAll of It Counts

Part of It Counts (Prorated)

Payroll for April 12 –April 25 paid on May 1

Payroll for April 26 –

May 9 paid on May 15

Payroll for May 10 –May 23 paid on May 29

Payroll for May 24 –

June 6 paid on June 12

Payroll for June 7 –June 20 paid on June 26

Payroll costs incurred but not paid during the Borrower’s last pay period of the Covered Period (or Alternative Payroll Covered Period) are eligible for forgiveness if paid on or before the next regular payroll date.

Assumes Bi-Weekly Payroll and using standard Covered Period

Paid & Partially Incurred

Paid & Incurred

Paid & Incurred

Partially Incurred

Reminder: Cannot include more than $15,385 in cash compensation per

employee in your forgiveness amount

Paid & Incurred


Example Period: April 20, 2020 – June 14, 2020 Non-Payroll: Rent


Rent for June paid on June 1



Rent for April paid on April 1 Rent for May paid on May 1

KEYAll of It Counts


An eligible nonpayroll cost must be paid during the Covered Period or incurred during the Covered Period and paid on or before the next regular billing date, even if the billing date

is after the Covered Period.

Paid & Incurred

Partially Incurred


Reminder: Total non-payroll costs cannot exceed more than 25% of your forgiveness amount without incurring

a reduction penalty


Example Period: April 20, 2020 – June 14, 2020 Non-Payroll: Utilities




KEYAll of It Counts


Utilities for March 1 –

March 31 paid on April 22

Utilities for April 1 –

April 30 paid on May 15

Utilities for May 1 –

May 30 paid on June 12

Utilities for June 1 –

June 30 paid on July 17

An eligible nonpayroll cost must be paid during the Covered Period or incurred during the Covered Period and paid on or before the next regular billing date, even if the billing date

is after the Covered Period.


Paid & Incurred

Paid Partially Incurred

Reminder: Total non-payroll costs cannot exceed more than 25% of your forgiveness amount without incurring

a reduction penalty

What Expenses Are Allowable for Forgiveness?

Payroll Costs Paid or IncurredDuring 8 Weeks

Non-Payroll Costs Paid or IncurredDuring 8 Weeks

Cash Compensation1

Employer Paid

Health2 & Retirement

Benefits

Employer Paid State

& Local Payroll Taxes

AllowableRent &

Mortgage Interest

Utilities (Water, Gas, Electricity,

Transp. Internet, Phone)

+

1Cash compensation includes salaries, wages and commissions (including to furloughed employees), tips, bonuses, hazard pay, paid leave, severance, and housing allowances. Cash compensation eligible for forgiveness is limited to $15,385 per employee.

2Group health benefits includes medical, dental, and vision.

Average FTEs: What’s an FTE in this context?

Defining Full-Time Equivalent Employees (FTEs/FTEEs)

FTEs ≠ headcount or number of employees

If you have 5 part-time employees, who each work 1 day per week…

Headcount FTEs5 1.0

Average FTE: What’s an FTE in this context?

Mathematical Method1 FTE = 40 hours/week

Example: Someone who is paid for 10 hours/week = .25 FTE

Simple MethodAnyone who is paid for 40

hours/week or more = 1 FTE

Anyone who has fewer hours = .5 FTE

Choose a Calculation Method

OR

Based on the initial reading of the Application:

Calculate: FTE Reduction Exceptions

Employees w/ change in FTE

ReferencePeriod FTE

CoveredPeriod

FTEWhat Happened? Impact

Jackson 1.0 0 Laid off Feb 19, 2020 Qualifies for Safe Harbor: no reduction if 1.0 FTE is

restored by 6/30/20Dianne 0.5 0 Left voluntarily during

Covered PeriodNo reduction in FTE

Rami 0.75 0.25 Requested a reduction in hours

during Covered Period

No reduction in FTE

Benjamin 0.5 1.0 Increased hours before Covered Period

Increase average FTE

Michelle 1.0 0 Fired for cause before Covered Period

Reduction in FTE

Rhonda N/A 0.75 New hire during Covered Period

Increase average FTE

FTE Reduction Penalty

Goal: Compare your FTEs during your 8-week forgiveness period to a prior reference period to see if a penalty

needs to be assessed if you do nothing

While you will look at specific employees to determine your FTE count in the time periods, you do not need to

retain the exact same people

FTE Reduction Penalty

Choose a Comparison Period

Choose the period with the lower FTE count

Feb 15, 2019–June 30, 2019

January 1, 2020 –Feb 29, 2020

Seasonal can also choose to use any consecutive 12-week period

between 5/1/19 – 9/15/19

OR

Based on the initial reading of the Application:

Calculate: Average FTE (Mathematical)

Employee Average Hours Paid Per Week During Reference Period

FTEAverage Hours Paid

Per Week During Covered Period

FTE

Joanne 30 0.75 30 0.75

Jackson 40 1.0 0 0

Robert 40 1.0 40 1.0

Dianne 20 0.5 0 0

Rami 30 0.75 10 0.25Benjamin 20 0.5 40 1.0

Michelle 40 1.0 0 0

Rhonda N/A N/A 30 0.75

Average FTEs Per Week During the Reference Period:

5.5Schedule A,

Line 11

Average FTEs Per Week During the 8-Week Forgiveness

Period:

3.75Schedule A, Line 12

Calculate: FTE Reduction Quotient

Average FTEs Per Week During the 8-week Forgiveness

Period

Average FTEs Per Week During the Reference Period

Schedule A, Line 124.25

Schedule A, Line 11

5

÷ ÷ ÷

FTE Reduction Quotient

0.85 Schedule A, Line 13

Example: Application:

Salary Reduction Penalty

Of (a) new employees who started in 2020 or (b) the employees with avg. annualized salaries of $100k or less

during all pay periods in 2019who were working during the 8

weeks, did you reduce any of their salaries/hourly rates after Jan 1,

2020?

No Reduction

NO!

YESStep 1: Was their avg. rate

reduced by more than 25% when comparing the 8-week period to

1/1/20– 3/31/20?

NO!Step 2: Did the reduction happen

between 2/15/20– 4/26/20?

YES

YES!

Step 3: Was the rate the employee had on 2/15/20

restored by 6/30/20?

YES!

Reduce by Compensation Lost During 8-Weeks As a Result of

Salary/Wage Cut

NO

NOUse FMA Estimator for

Specific Calculations

Calculate: Salary Reduction Penalty

Step 1 Determine if pay was reduced more than 25% for any individual employee (earning less than or equal to $100,000 for all pay periods in 2019)

Average annual salary or hourly wage

during Covered Period (or Alternate)

÷Average annual

salary or hourly wage between 1/1/20 and

3/31/20

=≥0.75

No Reduction over 25%

≤0.75Reduction over

25%

Skip Steps 2 -3

Proceed to Step 2


Step 2

Average annual salary or hourly wage as of

Feb. 15, 2020

Determine if Salary/Hourly Wage Reduction Safe Harbor is met

Average annual salary or hourly wage between

2/15/20 and 4/26/20

Safe Harbor has not been metIf (b) ≥ (a)

Safe Harbor applies

Calculate:

Proceed to Step 3

(a) (b)

If (a) ≤ (b) Proceed to Step 2.5


Step 2.5

(a) Average annual salary or hourly wage as

of Feb. 15, 2020

Determine if Salary/Hourly Wage Reduction Safe Harbor is met

(b) Average annual salary or hourly wage

between 2/15/20 and 4/26/20

(b) ≥ (a)Safe Harbor does

not apply

If:(a) < (b)

Average annual salary or hourly wage as of June

30, 2020

Calculate:

Proceed to Step 3

If:

(c) ≥ (1)Safe Harbor has

been met (no reductions)

(c) < (1)Safe Harbor has not been

met

Proceed to Step 3

Skip Step 3

vs.

(c)Average annual salary or hourly wage as of June

30, 2020


Hourly EmployeesStep 3 Determine Salary/Wage Reduction

Average # of hours worked

per week between

1/1/20 and 3/31/20

Average annual hourly wage during

Covered Period (or Alternate)

XAverage annual

hourly wage between

1/1/20 and 3/31/20

-0.75 X

X 8Hourly

Reduction for Table 1=


Salaried EmployeesStep 3 Determine Salary/Wage Reduction

Average annual salary

during Covered

Period (or Alternate)

XAverage annual

salary wage between

1/1/20 and 3/31/20

-0.75 X

÷ 52Salary

Reduction for Table 1

8

=

Potential Forgiveness Amounts

Your forgiveness amount is the smallest of these three options:

1 Potential Forgivable Amount Less the Penalties (“Modified Total” Application pg. 3, Line 9)

2 Total Loan Amount(“PPP Loan Amount” Application pg. 3, Line 9)

3 Amount Spent on Payroll in the 8 Weeks ÷ .75(“Payroll Cost 75% Requirement” Application pg. 3, Line 10)

PPP & Restricted Funding Sources

• Organizations receiving federal funds cannot "double dip," meaning you cannot claim to the federal government you spent different federal funds on the same expenses. It is likely PPP funds will be treated as federal funds for this purpose. Double dipping only occurs if you get reimbursed for the same expense twice.

• Nonprofits will need to keep good records to show which employees are being paid from what source so that the government isn't paying more than 100% of a salary. This is a good approach for all of your restricted funding sources.

• You should consider comparing your allowable expenses for PPP vs. your restricted grants and contracts.

• There may be other allowable expenses your other restricted funding sources can cover, including during the 8-week period.

• Some may choose to reduce their forgiveness request because they want to be able use a drawn down from their restricted funding sources.


Each borrower must submit documentation verifying eligible cash compensation and non-cash benefit payments consisting of each of the following:

Cash Compensation: Bank account statements or third-party payroll service provider reports Tax forms (or equivalent third-party payroll service provider reports) for

the periods that overlap with the Covered Period or the Alternative Payroll Covered Period: Payroll tax filings (Form 941) State quarterly (if appliable) and individual employee wage reporting

and unemployment insurance tax filings to each relevant stateBenefits:

Payment receipts, cancelled checks, or account statements documenting the amount of employer contributions to health insurance and retirement plans


Each borrower must submit documentation verifying eligible cash compensation and non-cash benefit payments consisting of each of the following:

Cash Compensation: Bank account statements or third-party payroll service provider reports Tax forms (or equivalent third-party payroll service provider reports) for

the periods that overlap with the Covered Period or the Alternative Payroll Covered Period: Payroll tax filings (Form 941) State quarterly (if appliable) and individual employee wage reporting

and unemployment insurance tax filings to each relevant stateBenefits:

Payment receipts, cancelled checks, or account statements documenting the amount of employer contributions to health insurance and retirement plans


FTEs: Each borrower must submit documentation for one of the following periods

showing the average number of FTE employees on payroll per month:1. Between February 15, 2019 and June 30, 2019 or2. Between January 1, 2020 and February 20, 2020

*Seasonal employers may use (1), (2), or any consecutive 12-week period between May 1, 2019 and September 15, 2019

Documents may include:• Payroll tax filings to the IRS (Form 941)• State quarterly business and individual employee wage reporting and

unemployment insurance tax filings

Documents submitted may cover periods longer than the specific time period.


Non-payroll:Each borrower must submit documentation verifying the existence of the obligations/services prior to February 15, 2020 and eligible payments from the Covered Period:

Business mortgage interest payments & rent or lease payments: Copy of Lender amortization schedule for mortgage interest Current lease agreement for rent or lease

Receipts or cancelled checks verifying eligible payments from the Covered Period; or lender account statements from Feb 2020 and the months of Covered Period through one month after the end of the Covered Period

Business Utility payments: Copy of invoices from Feb 2020 and those paid during the Covered Period; Receipts, cancelled checks, or account statements verifying eligible

payments you’re seeking forgiveness for