PPP Forgiveness

Maintain your full-time employees

Paycheck Protection Program (PPP) loan recipients need to ensure that proceeds are used for allowable purposes specified in the CARES Act and comply with guidelines that maximize the potential for loan forgiveness. See below for variables to consider when determining the amount of forgiveness.

If the average number of full-time employees per month during the 8-week period is lower than the average monthly full-time employees during February 15, 2019 to June 30, 2019, or the average number of full-time employees per month during the period from January 1, 2020 to February 29, 2020, then the loan forgiveness amount will be reduced by the ratio of full-time employees during the 8-week period to the number of full-time employees during the 2019 or 2020 comparison periods.

Note: You can choose either time period to calculate the average, but you will be better served by using the period with fewer full-time employees.

Maintain salaries and wages paid to specific employees

  • Loan Forgiveness will also be reduced if the reduction of wages paid to any employee during the 8-week period is in excess of 25% of the wages paid during the most recent fall quarter during which the employee was employed before the 8-week period.
  • Employees who during any single pay period in 2019 received wages at an annualized rate in excess of $100,000 can be excluded from this reduction calculation.

Maintain salaries and wages paid to specific employees

  • The reductions described above can be avoided by:
  1. Eliminating the full-time employee reduction by no later than June 30, 2020; or
  2. Eliminating the wage reduction for the specified employee by no later than June 30, 2020.
  • The SBA has further specified in FAQ #40 that a business’s loan forgiveness amount will not be reduced if the business laid off a full-time employee and offered to rehire the same employee (for the same salary/wages and same number of hours), but the employee declined the offer for rehire.

NOTICE: Attorney advertising. Attorney licensed to practice law in California only. Not intended as legal advice. No attorney-client relationship created hereby.