PAYCHECK PROTECTION PROGRAM (PPP)...BDO USA, LLP, a Delaware limited liability partnership, is the U.S. member of BDO International Limited, a UK company limited by guarantee, and

August 2020

BDO USA, LLP, a Delaware limited liability partnership, is the U.S. member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms.

PAYCHECK PROTECTION PROGRAM (PPP):WHAT BORROWERS NEED TO DO AND

WHAT RELATIONSHIP MANAGERS NEED TO KNOW(UPDATED THROUGH Legislation and SBA GUIDANCE ISSUED through August 11, 2020)

2

Agenda

Borrowers Application for Loan Forgiveness

Borrowers Action Items Before Applying for Loan Forgiveness

Safe Harbors and Exceptions

What Lender Relationship Managers Need to Know

Appendix – Additional Guidance and Information

PAYCHECK PROTECTION PROGRAM (PPP)

3

Loan Forgiveness Calculation Summary (SBA Form 3508-EZ)

Forgiveness Amount Calculation – Form 3508-EZ:

Payroll and Nonpayroll Costs

Line 1. Payroll Costs: _____________________ Line 2. Business Mortgage Interest Payments: _____________________ Line 3. Business Rent or Lease Payments: _____________________ Line 4. Business Utility Payments: _____________________

Potential Forgiveness Amounts

Line 5. Add the amounts on lines 1, 2, 3, and 4: _____________________ Line 6. PPP Loan Amount: _____________________ Line 7. Payroll Cost 60% Requirement (divide Line 1 by 0.60): _____________________

Forgiveness Amount

Line 8. Forgiveness Amount (enter the smallest of Lines 5, 6, and 7): _____________________


4

Loan Forgiveness Calculation Summary (SBA Form 3508)Forgiveness Amount Calculation – Form 3508:

Payroll and Nonpayroll Costs

Line 1. Payroll Costs (enter the amount from PPP Schedule A, line 10): _____________Line 2. Business Mortgage Interest Payments: _____________Line 3. Business Rent or Lease Payments: _____________Line 4. Business Utility Payments: _____________

Adjustments for Full-Time Equivalency (FTE) and Salary/Hourly Wage Reductions

Line 5. Total Salary/Hourly Wage Reduction (enter the amount from PPP Schedule A, line3): _____________Line 6. Add the amounts on lines 1, 2, 3, and 4, then subtract the amount entered in line5: _____________Line 7. FTE Reduction Quotient (enter the number from PPP Schedule A, line13): _____________

Potential Forgiveness Amounts

Line 8. Modified Total (multiply line 6 by line 7): _____________Line 9. PPP Loan Amount: _____________Line 10. Payroll Cost 60% Requirement (divide line 1 by 0.60): _____________

Forgiveness Amount

Line 11. Forgiveness Amount (enter the smallest of lines 8, 9, and 10): _____________


Difference between Form 3508 and 3508EZ are lines 5 through 7 (i.e., the borrower’s reductions)

5

Borrower Action Items Before Applying for Loan Forgiveness

1. Elections and considerations for the Borrower:- Closely monitor legislation and guidance- If applicable, use the simplified Form 3508-EZ (if either 1, 2 or 3 applies)

1. Borrower is self-employed individual, independent contractor, or sole proprietor who (1) had no employees at the time of the PPP loan application and (2) did not include any employee salaries in the computation of average monthly payroll in the Borrower Application Form (SBA Form 2483) or

2. Borrower did not reduce salaries or wages by more than 25% compared to Q1 2020 AND did not reduce the number of employees or the average paid hours of employees from January 1, 2020 to the end of the Covered Period or

3. Borrower did not reduce salaries or wages by more than 25% compared to Q1 2020 AND was unable to operate between February 15, 2020 to the end of the Covered Period at the end of the Covered Period at the same level of business activity as before February 15, 2020


6


1. Elections and considerations for the Borrower (cont’d):- 8 week period or 24 week period – “Covered Period” – may be affected by new

legislation or guidance- May submit a loan forgiveness application before the end of the Covered Period- Alternative Payroll Covered Period to align the Covered Period with payroll periods - Simplified FTE calculation – 40+ hours employees = 1.0 FTE, all others 0.5 FTE- Understand safe harbors and exceptions- Nonpayroll costs cannot exceed 40% of total forgiveness amount- For Form 3508 filers, denominator time period for FTE Quotient (Critical) – choose

lesser of:- February 15, 2019 to June 30, 2019- January 1, 2020 to February 29, 2020- For seasonal employers only, the same 12-week period used for the application


7


2. Data Accumulation- Gross compensation (including bonuses, commissions, tips, taxable fringe benefits, etc.)

paid during the Covered Period- Health care costs (including insurance premiums or self-insured plan costs), employer

contributions to employee retirement plans, state/local unemployment insurance premiums during the Covered Period

- Rent on real property or personal property paid for the Covered Period (Agreements had to be in place on February 15, 2020, but can be renewed)

- Interest on mortgages obligations in place on February 15, 2020 (or refinanced after that date) and paid during the Covered Period

- Utilities paid for the Covered Period (service had to be in place on February 15, 2020)- Electricity- Gas (for facilities, not for vehicle fuel)- Water- Telephone- Transportation utility fees imposed by state and local governments- Internet Access


8


3. Run preliminary calculations – Can be done within the Portal- If using Form 3508-EZ go straight to the Loan Forgiveness Calculation- If using Form 3508

- Complete Schedule A worksheet and Schedule A (slides 26 and 27)- Complete the Loan Forgiveness Calculation

4. Documents needed to submit to Lender- Payroll records (See slide 38)- FTE count for Covered Period (Numerator) (See slide 39)- FTE count Reference Period (Denominator) (See slide 39)- Non-payroll costs (See slide 40)

5. Documents to Maintain (but not required to be submitted to Lender) (See slide 41)

6. Monitor and observe changes in Small Business Administration (SBA) guidance


9

Borrowers Application for Loan Forgiveness

How to Apply for Forgiveness with the Bank:- Create account on Lender portal- Choices to make (Slide 5)- If applicable, complete SBA Form 3508-EZ, Loan Forgiveness Calculation- If not, complete SBA Form 3508, PPP Schedule A and then the Loan Forgiveness

Calculation- Submit payroll and other required documentation to your Lender (or the Lender that is

servicing your loan) according to Lender’s instructions

SBA Loan application has four (4) components:1. PPP Loan Forgiveness Calculation Form2. PPP Schedule A (Form 3508 only) – Summary Information for FTE and Wage/Salary

Reductions3. PPP Schedule A Worksheet – FTE and Wage/Salary Reductions4. Optional PPP Borrower Demographic Information Form


10

Safe Harbors

Salary and Hourly Wage Reduction- If Borrower reduced the rate of employees’ annual base salary or hourly wages by more than 25%

during the Covered Period or Alternative Covered Period compared to January 1 to March 31, 2020 and restores the rate of pay not later than December 31, 2020, then the greater than 25% reduction can be ignored

- Focuses on regular base rate of pay (salary or hourly), so reducing bonuses, incentives or tips (other than tips needed to satisfy minimum wage laws) does not count as a reduction

- Restoration for a 24-week Covered Period or Alternative Payroll Covered Period must include the amount for the entire 24 weeks even for early applications

- Payment of restoration seems to be the earlier of December 31, 2020 or the date of the loan forgiveness application

FTE Reduction- If Borrower is unable to operate between February 15, 2020 and the end of the Covered Period at

the same level of business activity as before February 15, 2020 due to compliance with government requirements or guidance then the FTE reduction can be ignored

- If Borrower reduced FTE employees between February 15, 2020 and April 26, 2020 and restores the FTE employees not later than December 31, 2020 then the FTE reduction can be ignored

- Restoration seems to be the earlier of December 31, 2020 or the date of the loan forgiveness application


11

FTE Reduction Exceptions

Any of the following exceptions would exclude these employees from the FTE, (i.e., these employees do not reduce the Borrower’s loan forgiveness). The exception would only apply if the position was not filled by a new employee- Any positions for which the Borrower made a good-faith, written offer to rehire an

individual who was an employee on February 15, 2020 and unable to hire similarly qualified employees for unfilled positions on or before December 31, 2020

- Any positions for which the Borrower made a good-faith, written offer to restore any reduction in hours, at the same salary or wages, during the Covered Period (or Alternative Payroll Covered Period) and the employee rejected the offer

- Any employees who during the Covered Period (or Alternative Payroll Covered Period) were either (a) fired for cause, (b) voluntarily resigned, or (c) voluntarily requested an received a reduction in their hours


12

What Lender Relationship Managers Need to Know

Watch legislation for simplified loan forgiveness for loans under $150,000

Make a list of their clients with PPP loans Gain access to the Lender portal and understand the Lender dashboard Understand PPP loan forgiveness rules and issues Grasp the gray areas on positions Borrowers may want to take and what

is acceptable to their Lender Consider the sophistication of each Borrower client Know the type of business of each Borrower client – C-Corporation, S-

Corporation, LLC, Partnership, Sole Proprietor Identify BDO PPP technical resources and SBA resources


13

Appendix –Additional Guidance and Information

13 PAYCHECK PROTECTION PROGRAM (PPP)

14

Most Up To Date Guidance on PPP Loans – August 24, 2020 Owner-Employee New Definition for C-Corp and S-Corp

- Only 5% or greater ownership is treated as an owner-employee subject to the compensation limit

- Forgivable compensation for owner-employee of a C-Corp is limited to 2.5/12 of 2019 employee cash compensation, plus state and local taxes assessed on that compensation, plus health costs paid, and 2.5/12 of 2019 retirement plan contributions made by the employer

- Forgivable compensation of owner-employee of a S-Corp is limited to 2.5/12 of 2019 employee cash compensation, plus state and local taxes assessed on their compensation during the covered period, and 2.5/12 of 2019 retirement plan contributions made by the employer

- Compensation to employees owning less than 5% should be included as employees on Table I and Table II as appropriate and limited only to the $100,000 annualized compensation rule

Forgivable Non-Payroll Costs - Only the business portion of shared expenses for rent, interest and utilities- Must be net of any reimbursement included sublets


15

Guidance on PPP Loans – August 11, 2020

Encourages the Use of Form 3508EZ for Sole Proprietors, Independent Contracts And Self-employed Individuals With No Employees at the time of the Loan Application

Approves Scanned Copies Of Documents, E-signature or E-consents Confirms No Payments Until Forgiveness is Finalized by SBA for Timely

Applicants Reiterates Some Additional Payroll Cost Questions

- Incurred During/Paid After The Covered Period, Incurred Before /Paid During The Covered Period, Partial Pay Periods

- Use Of Gross Payroll Amount, Including Lost Tips, Lost Commission, Bonuses and Other Forms of Incentive Pay

- Health Care Costs are Limited to the Cost of Coverage for the Covered Period - No Acceleration Of Contributions To Retirement Plans

Forgiveness Reductions- Employers using the special seasonal rules must use the same 12 weeks used in its application as

the FTE comparison period- FTE count during the covered period includes employees making over $100,000- Wage/salary reductions clarified and if applicable, must be multiplied by the entire 24 week

covered period


16

Guidance on PPP Loans – August 4, 2020

General Loan Forgiveness- Which application should be used by entities with no employees? - Acceptance of scanned documents and electronic signatures- Are payments required before SBA remits forgiven amount to lender?

Loan Forgiveness Payroll Costs - Eligibility of payroll costs incurred during the Covered Period or Alternative Payroll Covered

Period but paid before the next regular payroll date- Payroll costs incurred before the Covered Period or Alternative Payroll Covered Period but

paid during the Covered Period or Alternative Covered Period are eligible for loan forgiveness

- Payroll costs for partial pay periods- Gross amount of payroll is allowed including payments to replace lost tips, lost commissions,

bonuses and hazard pay- Expenses for group health care benefits do not include any amounts paid by employees

whether paid on a pre-tax or after tax basis- Accelerated payments of annual retirement benefits are NOT eligible; annual contributions

made during the Covered Period or Alternative Payroll Covered Period must be prorated


17

Most Up To Date Guidance on PPP Loans – August 4, 2020 (cont’d)

Loan Forgiveness Payroll Cost (cont’d)- LLCs - follow the rules that apply to how their business was organized for tax filing

purposes for tax year 2019 (or if a new business, the expected tax filing situation for 2020)

- Sole proprietorships, other self-employeds or independent contractors - 2.5/12 of 2019 net profit as reported on Form 1040 Schedule C line 31 (or 2.5/12 of 2019 net farm profit, as reported on Form 1040 Schedule F line 34) (or for new businesses, the estimated 2020 Schedule C or Schedule F)- Health costs, retirement contributions, and state or local taxes are not eligible for

loan forgiveness since they are paid out of net self-employment income- If the Borrower did not submit its 2019 IRS Form 1040 Schedule C (or F) to the

Lender when the Borrower initially applied for the loan, it must be included with the Borrower’s forgiveness application


18

Covered Period and Alternative for Some Payrolls

Covered Period General Rule- Eight-week (56-day) or twenty four-week (168-days) period begins on the PPP Loan

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 (8-week period) or Sunday, October 4 (24-week period)

- Under the existing guidance, this requires payroll periods that cross the last day of the Covered Period to be prorated to exact days in the period

Alternative Payroll Covered Period for weekly or bi-weekly payroll periods- 8-week or 24-week period begins on the first day of first pay period following the PPP Loan

Disbursement Date. For an 8-week period 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

- This avoids the allocation of payrolls at the end of the period - Does not change the Covered Period for non-payroll costs


19

Payroll Costs for Forgiveness – Timing

Payroll costs are considered paid on the day that paychecks are distributed or the Borrower originates an ACH credit transaction

Payroll costs are considered incurred on the day that the employee’s pay is earned

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. Otherwise, payroll costs must be paid during the Covered Period (or Alternative Payroll Covered Period)

Therefore, no special payroll processing is required on the last day of the Covered Period (or Alternative Payroll Covered Period)

For each individual employee for an 8-week period, the total amount of cash compensation eligible for forgiveness may not exceed an annual salary of $100,000, as prorated for the covered period ($100,000 *56/365 = $15,385) ($46,154 if you are using the 24-week period)


20

Payroll Costs for Forgiveness – Timing (cont’d)

Cash compensation- Gross salary, gross wages, gross tips, gross commissions, paid leave (vacation, family,

medical or sick leave, other than including leave covered by the Families First Coronavirus Response Act), and allowances for dismissal or separation paid or incurred. Differs from Form W-2, box 1

- No more than $15,385 for 8-week period or $46,154 for 24-week period should be counted for an employee during the covered period or alternative payroll covered period

Other Compensation – Total Amount Paid by Borrower for:- Employer contributions for employee health insurance, including employer contributions to

a self-insured, employer-sponsored group health plan (but no accelerated expenses for periods outside the Covered Period),

- Employer contributions to employee retirement plans (but no accelerated expenses for periods outside the Covered Period),

- Employer state and local taxes assessed on employee compensation (e.g., state unemployment insurance tax), and

- Do not include employee contributions when calculating payroll costs because employee amounts are included in the gross wages used for cash compensation


21

Owner-employee, a Self-employed Individual, or General Partner Caps on the Amount of Loan Forgiveness

- The lower of (i) the individual’s applicable compensation across all businesses in 2019, or (ii) $15,385 for the 8-week period ($100,000 times 8/52) or $20,833 for the 24-week period (the 2.5-month equivalent of $100,000 per year)

Schedule C filers are capped by their owner compensation replacement, calculated by multiplying their 2019 net profit times 8/52, not to exceed $15,385 ($20,833 for 24-week period)

General partners are capped by the amount of their 2019 net earnings form self-employment (reduced by claimed Section 179 expense deduction, unreimbursed partnership expenses and depletion from oil and gas properties) multiplied by .9235 that takes into account SE taxes multiplied by 8/52, not to exceed $15,385 for 8-week period or by 2.5/12, not to exceed $20,833 for 24-week period

No additional forgiveness is provided for retirement contributions or health costs for Schedule C or F filers and general partners, as such expenses are paid out of their net self employment income

No additional forgiveness is provided for health costs for 2% or greater S corporation owner-employee, because such payments are already included in their compensation (but retirement contributions can be submitted)


22

Non-Payroll Costs for Forgiveness

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

Covered mortgage obligations: payments of interest (not including any prepayment or payment of principal) on any business mortgage obligation on real or personal property incurred before February 15, 2020 (including any refinancing after that date) (“business mortgage interest payments”)

Covered rent obligations: business rent or lease payments pursuant to lease agreements for real or personal property in force before February 15, 2020 (including renewals after that date)

Covered utility payments: business payments for a service for the distribution of electricity, gas, water, transportation utility fees imposed by state and local governments, telephone, or internet access for which service began before February 15, 2020

Eligible nonpayroll costs cannot exceed 40% of the total forgiveness amount


23

Non-Payroll Costs for Forgiveness – Beginning of Period Example – Eight-week Period

Covered Period Begins May 6, 2020 and Ends June 30, 2020 Telephone Service period is April 1 – April 30, 2020 which is invoiced on

May 1, 2020 and due on May 7, 2020- Payment is timely on May 1-5, 2020 - Not counted because expense was incurred and

paid prior to the covered period- Payment is timely on May 6-7 2020 – Entire amount counts because it was paid during

the covered period- Payment is late on May 8 – June 30, 2020 – Entire amount counts because it was paid

during the covered period- Payment is very late after June 30, 2020 - Nothing can be included because it was not

incurred nor paid during the covered period


24

Non-Payroll Costs for Forgiveness – End of Period Example – Eight-week Period

Covered Period Begins May 6, 2020 and Ends June 30, 2020 Telephone Service period is June 1 – June 30, 2020 which is invoiced on

July 1, 2020 and due on July 7, 2020- Payment is timely on July 1-7, 2020 – Entire amount counts because expense was

incurred in the Covered Period and paid before the next billing date of August 1, 2020- Payment is late on July 8 – August 31, 2020 – Entire amount counts because it was

incurred during the Covered Period and paid before the next billing date- Payment is very late after August 31, 2020 - Nothing can be included because it was

not paid before the next billing date notwithstanding the fact that the expense was incurred during the Covered Period


25

Form 3508 – Schedule A


26

Form 3508 – Schedule A (cont’d)


27

Grey Areas


28

Adjustments That Might Reduce Loan Forgiveness


29

Salary/Hourly Employees Wage Reductions During Covered Period Applies before application of the FTE reduction analysis Designed to protect wages for employees whose annualized cash

compensation for all pay periods in 2019 are less than $100,000 For each protected employee:

- Step 1: Determine if base salary or hourly rate of pay (excluding bonuses, commissions, health coverage and tips beyond what is needed to satisfy minimum wage laws) was reduced more than 25% during the covered period- Compare the rate of annual salary or hourly wage during the covered period or

alternative payroll covered period with that of Q1 2020- Comparison looks at rate of pay, not actual payments

- Step 2: For those with a greater than 25% reduction, determine if the Salary/Hourly Wage Reduction Safe Harbor is met on the earlier of December 31, 2020 or date of application- Comparison is to “Average” salary/wage rate on December 31, 2020 or date of

application so back wages may be required to satisfy this safe harbor- Step 3: For those not meeting the safe harbor, determine the Salary/Hourly Wage

Reduction


30

Adjustments That Can Reduce Loan Forgiveness

Full-Time Equivalency (FTE) Reduction Calculation- What is a FTE

- For each employee, enter the average number of hours paid per week, divide by40, and round the total to the nearest tenth. The maximum for each employee iscapped 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

- Observation:- Simplified method eliminates need for hours worked; just identify full time and

part time employees


31

Comparison of Regular and Simplified FTE Determination

Example 1- Previously, 3 employees @ 10 hrs. equals .9 FTE regular method or 1.5 FTE simplified

method- Covered period 1 employee @ 30 hrs. equals .8 FTE regular method or .5 FTE

simplified method- If more work is being done be fewer people regular appears better

Example 2- Previously, 3 employees @ 20 hrs. equals 1.5 FTE regular method or 1.5 FTE simplified

method- Covered Period 3 employees @ 10 hrs. equals .9 FTE regular method or 1.5 FTE

simplified method- If all non-full-time employees are working fewer hours simplified method appears

better


32

Adjustments That Can Reduce Loan Forgiveness (cont’d) Full-Time Equivalency (FTE) Reduction Calculation

- If Borrower has not reduced the number of employees or the average paid hours ofemployees between January 1, 2020 and the end of the Covered Period there is no FTEreduction

- Otherwise determine the quotient by dividing the Total Average FTEs during the covered period by the Average FTE during the Borrower’s chosen reference period but not to exceed1.0

FTE Reduction Safe Harbor for Rehires- Borrower is exempt from the reduction in loan forgiveness based on FTE employees

described above if both of the following conditions are met:1. Borrower reduced its FTE employee levels in the period beginning February 15,

2020, and ending April 26, 20202. Borrower then restores 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

- If salary/wages are not restored there may still be a reduction to loan forgiveness under the Salary/Wage reduction rule


33

Adjustments That Can Reduce Loan Forgiveness (cont’d)

FTE Reduction Safe Harbor for Inability to Return To Normal- Borrower was unable to operate between February 15, 2020 and the end of the

Covered Period at the same level of business activity as before February 15, 2020 due to compliance with requirements established or guidance issued between March 1, 2020 and December 31, 2020, by the Secretary of Health and Human Services, the Director of the Centers for Disease Control and Prevention, or the Occupational Safety and Health Administration, related to the maintenance of standards of sanitation, social distancing, or any other work or customer safety requirement related to COVID-19


34

Adjustments That Can Reduce Loan Forgiveness (cont’d)

FTE Reduction Exceptions that do not reduce Loan Forgiveness:- Any positions for which the Borrower made a good-faith, written offer to rehire an

employee during the Covered Period or the Alternative Payroll Covered Period which was rejected by the employee

- Any employees who during the Covered Period or the Alternative Payroll Covered Period but only if the position was not fill by a new employee- Were fired for cause- Voluntarily resigned- Voluntarily requested and received a reduction of their hours

These exceptions are critical to prevent reduction of loan forgiveness when employees cannot be brought back through no fault of the Borrower


35

Comparison of Regular and Simplified FTE Determination

Example 1- Previously, 3 employees @ 10 hrs. equals .9 FTE regular method or 1.5 FTE simplified

method- Covered period 1 employee @ 30 hrs. equals .8 FTE regular method or .5 FTE

simplified method- If more work is being done be fewer people regular appears to be better

Example 2- Previously, 3 employees @ 20 hrs. equals 1.5 FTE regular method or 1.5 FTE simplified

method- Covered Period 3 employees @ 10 hrs. equals .9 FTE regular method or 1.5 FTE

simplified method- If all non full-time employees are working fewer hours simplified method appears to

be better


36

Which Employees to Count in FTE Calculations

Count the employees for the employer as used for the PPP- Affiliated groups- If NAICS Code begins with 72 the individual locations used for the PPP application- Member of affiliated groups that include NAICS code of 72, all members except the

NAICS code 72

Employees of the Employer- Those who receive wages under the employer’s EIN(s)- Those who render services but are paid under a different EIN such as a professional

employer organization or other similar arrangement- Other arrangements might include a payroll trustee agreement or a management

companies that pay workers under its EIN but charges back the payroll cost to itscustomers


37

Document Submission to Lender

Payroll Bank account statements or third-party payroll service provider reports

documenting the amount of cash compensation paid to employees 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:i. Payroll tax filings reported, or that will be reported, to the IRS (typically, Form

941); andii. State quarterly business and individual employee wage reporting and

unemployment insurance tax filings reported, or that will be reported, to the relevant state

Payment receipts, cancelled checks, or account statements documenting the amount of any employer contributions to employee health insurance and retirement plans that the Borrower included in the forgiveness amount


38

Document Submission to Lender (cont’d)

FTE Documentation showing (at the election of the Borrower):

- The average number of FTE employees on payroll per month employed by the Borrower between February 15, 2019 and June 30, 2019;

- The average number of FTE employees on payroll per month employed by the Borrower between January 1, 2020 and February 29, 2020; or

- In the case of a seasonal employer, the average number of FTE employees on payroll per month employed by the Borrower between February 15, 2019 and June 30, 2019; between January 1, 2020 and February 29, 2020; or any consecutive twelve-week period between May 1, 2019 and September 15, 2019

The selected time period must be the same time period selected for purposes of the chosen reference period

Documents may include payroll tax filings reported, or that will be reported, to the IRS (typically, Form 941) and state quarterly business and individual employee wage reporting and unemployment insurance tax filings reported, or that will be reported, to the relevant state

Documents submitted may cover periods longer than the specific timeperiod


39

Document Submission to Lender (cont’d)

Nonpayroll Documentation verifying existence of the obligations/services prior to

February 15, 2020 and eligible payments from the Covered Period:- Business mortgage interest payments: Copy of lender amortization schedule and

receipts or cancelled checks verifying eligible payments from the Covered Period; or lender account statements from February 2020 and the months of the Covered Period through one month after the end of the Covered Period verifying interest amounts and eligible payments

- Business rent or lease payments: Copy of current lease agreement and receipts or cancelled checks verifying eligible payments from the Covered Period; or lessor account statements from February 2020 and from the Covered Period through one month after the end of the Covered Period verifying eligible payments

- Business utility payments: Copy of invoices from February 2020 and those paid during the Covered Period and receipts, cancelled checks, or account statements verifying those eligible payments


40

Document to Maintain but Not Submitted

PPP Schedule A Worksheet or its equivalent and the following:- Documentation supporting the listing of each individual employee in PPP Schedule A Worksheet

Table 1, including the “Salary/Hourly Wage Reduction” calculation, if necessary- 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

- Documentation regarding any employee job offers and refusals, firings for cause, voluntary resignations, and written requests by any employee for reductions in work schedule

- Documentation supporting the certification that Borrower was unable to operate between February 15, 2020 and the end of the Covered Period at the same level of business activity as before February 15, 2020

- Documentation supporting the PPP Schedule A Worksheet “FTE Reduction Safe Harbor” All records relating to the Borrower’s PPP loan, including

- Documentation submitted with its PPP loan application, documentation supporting the Borrower’s certifications as to the necessity of the loan request and its eligibility for a PPP loan

- Documentation necessary to support the Borrower’s loan forgiveness application, and- Documentation demonstrating the Borrower’s material compliance with PPP requirements

Borrower must retain all such documentation in its files for six years after the date the loan is forgiven or repaid in full, and permit authorized representatives of SBA, including representatives of its Office of Inspector General, to access such files upon request
