Loan Necessity Questionnaires

Date December 14, 2020
Authors Amy M. Reynallt
Categories

Last month, Paycheck Protection Program (PPP) borrowers learned about Loan Necessity Questionnaires (SBA Form 3509 and SBA Form 3510) that were released from the SBA to lenders. SBA indicated that these forms would be provided to borrowers that, together with their affiliates, received loans of $2 million or more in an effort to evaluate their good-faith certification that current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant”. Because no guidance was issued and the forms were initially not published with other PPP guidance on the SBA or Treasury websites, many borrowers raised questions about these forms and how they would be used by SBA.

While the SBA and Treasury have now posted these forms, they also released a new Frequently Asked Question (FAQ). In the answer, SBA confirms that a request to complete these forms does not indicate that the SBA is questioning the borrower’s certification of economic uncertainty or need for the loan.

SBA continues by explaining that “this certification is required to have been made in good faith at the time of the loan application, even if subsequent developments resulted in the loan no longer being necessary.” SBA may review the borrower’s “circumstances and actions both before and after the borrower’s certification to the extent that doing so will assist SBA in determining whether the borrower made the statutorily required certification in good faith at the time of its loan application.” SBA reserves the right to request additional support, which may allow borrowers to provide more detailed responses or narratives regarding their circumstances.

Borrowers expecting to receive these forms may consider the following actions:

  • Review the available forms and prepare your responses.
  • Consider additional narratives that may be important for the SBA to consider.
  • If you receive the form from your lender, submit your response within 10 business days of receipt.

For questions regarding the PPP or Loan Necessity Questionnaires, please contact your HBK Advisor.

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IRS and Treasury Release Guidance on Deductibility of PPP Expenses

Date November 23, 2020
Categories
On November 18, the Department of Treasury and IRS released long-anticipated guidance regarding the tax treatment of expenses used to support Paycheck Protection Program (PPP) loan forgiveness. IRS Notice 2020-32, released earlier this year, stated that expenses are not deductible if the payment of that expense results in forgiveness. While some Congressional leaders have proposed that the IRS notice was not consistent with legislators’ intent, no Congressional action has been taken to date that would overturn the IRS notice. Further, little additional guidance was released for borrowers and taxpayers. This week’s guidance now offers some clarity. The revenue ruling (2020-27) and revenue procedure (2020-51) explain that businesses “may not deduct those expenses in the taxable year in which the expenses were paid or incurred if, at the end of such taxable year, the taxpayer reasonably expects to receive forgiveness of the covered loan on the basis of the expenses it paid or accrued during the covered period, even if the taxpayer has not submitted an application for forgiveness of the covered loan by the end of such taxable year.” The guidance means that PPP loan borrowers expecting forgiveness cannot deduct the expenses generating forgiveness in the taxable year the expenses occurred. The deductibility of these expenses is not dependent on the borrower submitting a forgiveness application nor on the borrower receiving forgiveness. It is only dependent on whether the borrower “reasonably expects to receive forgiveness.” If a borrower reasonably expects forgiveness and does not deduct the expenses, and it is later determined that their loan is not forgiven, the expenses may be deducted on their original or amended 2020 tax return or their original 2021 return. PPP loan guidance continues to evolve. For questions about your PPP loan, forgiveness, or the newest IRS and Treasury guidance, please reach out to your HBK Advisor.

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Five Common Concerns About PPP Loan Forgiveness Applications

Date November 11, 2020
Authors Amy M. Reynallt
Categories

Borrowers of Paycheck Protection Program (PPP) loans have begun working through their forgiveness applications and are learning that the process is quite complex. While applying for forgiveness is different for each borrower, here are five issues that have surfaced as common concerns and that may affect the amount of forgiveness you receive:

1. Different inputs can equal different outputs.

Application instructions include a variety of options, including several eligible costs, different reference periods, several safe harbor options, and different methods of calculations. Your amount of forgiveness will vary depending on the options you use.

  • If you complete the application and are not pleased with your projected level of forgiveness, make sure you have considered all your options. For example, did you consider the different reference periods used to determine the FTE Reduction Quotient? Have you compared both the standard and the simplified methods in calculating the FTE count? Have you considered all safe harbor options for the FTE reduction and average annual salary/hourly wage reduction?

2. Coordination with the EIDL advance.

If you received an Economic Injury Disaster Loan (EIDL) Emergency Advance or Emergency Grant (EIDLG), your PPP loan forgiveness will be reduced by the amount of your advance or grant. You must include the advance or grant amount as well as the EIDL application number on your PPP loan forgiveness application.

  • Be sure that you include only the EIDL advance or grant amount on the EIDL advance amount line, not the entire EIDL amount. Note that EIDL Advance amounts will not exceed $10,000.
  • Do not reduce your projected forgiveness amounts listed on the forgiveness application by your advance or grant amounts. The SBA will reduce the forgiveness amount provided to your lender.

3. Eligible payroll costs.

Payroll costs eligible for forgiveness include employer contributions for employee health insurance.

  • Include only the employer portion of the contribution as an eligible payroll cost. Employee contributions are already included in the employee’s gross payroll or cash compensation. As such, employers cannot rely on the totals indicated on your health insurance bills. Additional limitations apply if you are an owner of 2 percent or more of an S corporation as well as to those owners’ family members. For those individuals, employer contributions for health insurance are considered cash compensation.

4. Ratio of forgivable payroll and non-payroll costs.

The Paycheck Protection Program Flexibility Act of 2020 (PPPFA), passed by Congress on June 5, provides that no more than 40 percent of forgiveness can be attributed to non-payroll costs. You are required to certify this on the S application and show it as a calculation on line 10 of the Standard application or line 7 of the EZ application.

  • Calculation: On line 10 of the Standard application and line 7 of the EZ application, follow the instruction to divide line 1 (eligible payroll costs) by .6. The calculation determines a potential amount of forgiveness if the payroll costs are reported equal to 60 percent of that forgiveness. This potential forgiveness amount will be compared with the PPP loan amount and the calculation including your FTE and annual salary/hourly wage reductions, where the lowest of the three will be used as the application’s forgiveness amount.

5. Ensure your data is easy to understand by the lender and the SBA.

Business owners understand their businesses better than anyone else. Even payroll reports can have quirks or customizations that they, their managers and employees find it easy to understand but that might not be clear to those reviewing your reports for loan forgiveness.

  • Make the data as transparent as possible. While the SBA provides specific documentation requirements, maintaining and in some cases submitting clarifications, reconciliations and other data may make it easier for the lender and SBA to review their documentation—especially where prorations or limitations apply. Appeals processes are available but not guaranteed, so it is important to ensure your data and justification are clear in your initial submission.

Contact your HBK advisor with your PPP loan forgiveness application questions or concerns.

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Borrowers Should Prepare to Answer New PPP Loan Necessity Questionnaires

Date November 3, 2020
Authors Amy M. Reynallt
Categories

Borrowers, together with their affiliates, who have loans over $2 million may be required to provide additional information to support the certifications made on their Paycheck Protection Program (PPP) loan application via two new SBA questionnaires.

When applying for the PPP loan, borrowers certified that “current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” The certification drew attention in May when some borrowers were alleged to have taken loans without it being “necessary,” and some large companies returned borrowed funds. The SBA also released an FAQ indicating that “to further ensure PPP loans are limited to eligible borrowers in need, the SBA has decided, in consultation with the Department of the Treasury, that it will review all loans over $2 million, in addition to other loans as appropriate.” While subsequent guidance indicated the SBA could review the borrower’s eligibility, including for this certification, no guidance has been provided to indicate how the SBA would evaluate how borrowers determined they had the need required to make this certification.

Now, SBA Form 3509 and SBA Form 3510 have begun circulating (although they have not been released directly by the SBA or Treasury). Instructions on the forms indicate that borrowers and their affiliates (per SBA affiliation rules) that received loans over $2 million would be required to complete and submit both forms, which address the borrowers’ business activities and liquidity. Accordingly, lenders would request the forms from borrowers, and borrowers would be required to complete them within 10 days of lenders’ requests.

These forms, or questionnaires, have not been confirmed as official by the SBA or Department of the Treasury, and no corresponding guidance has been issued. However, borrowers with loans greater than $2 million should review the forms with the understanding that they are likely to be used by the SBA to confirm eligibility. Borrowers concerned about their eligibility should contact their legal counsel.

If you have questions about your PPP loan, forgiveness, or the Loan Necessity questionnaires, please contact your HBK Advisor.

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SBA Seeks to Simplify PPP Loan Forgiveness for Small Borrowers

Date October 9, 2020
Authors Amy M. Reynallt
Categories

On October 8, 2020, the Small Business Administration (SBA), in conjunction with the Treasury Department, released a new application designed to simplify the Paycheck Protection Program (PPP) loan forgiveness process for some small borrowers.

SBA Form 3508S is intended for borrowers who received PPP loans of up to $50,000. However, if those borrowers and their affiliates received loans totaling at least $2 million, they are not eligible to use Form 3508S.

Form 3508S simplifies the forgiveness process by eliminating the FTE and wage/salary reduction calculations. In an Interim Final Rule also released on October 8, the SBA and Treasury explained that these exemptions are allowable as de minimis exceptions to the CARES Act. Specifically, the SBA believes that most borrowers in this dollar range would not be affected by these reductions because they did not have FTE or wage/salary reductions or they would otherwise qualify for the safe harbor options.

Borrowers who do not fall into the under-$50,000 range should continue to use Form 3508 or Form 3508EZ applications. They should also stay alert to possible changes to forgiveness requirements through future legislation.

To obtain the SBA copy of the simplified application, instructions and related Interim Final Rule, visit:


For questions about PPP loan forgiveness or for support in completing the application documents, please contact your HBK Advisor.

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SBA Releases Guidance for Borrowers on Change of Ownership

Date October 5, 2020
Authors Amy M. Reynallt
Categories

On October 2, the Small Business Administration (SBA) released a Procedural Notice regarding PPP borrowers’ change of ownership.

SBA defines a change of ownership as occurring when:

  • “… at least 20 percent of the common stock or other ownership interest of a PPP borrower (including a publicly traded entity) is sold or otherwise transferred, whether in one or more transactions, including to an affiliate or an existing owner of the entity,
  • the PPP borrower sells or otherwise transfers at least 50 percent of its assets (measured by fair market value), whether in one or more transactions, or
  • a PPP borrower is merged with or into another entity.”

Borrowers undergoing a change of ownership must notify their lender in writing and provide the proposed agreement or other relevant documents before the change of ownership occurs. There are no restrictions if the loan has been paid in full or the forgiveness process has been completed, meaning SBA has remitted funds to the lender or the borrower has repaid any remaining balance.

Other considerations relating to change of ownership include:

No SBA approval will be required when:

  • The sale or transfer is of common stock or other ownership interest or a merger where:
    • The sale or transfer of common stock or other ownership transfer is less than 50 percent of the PPP borrower’s interest, where all sales and transfers occurring from the date the PPP loan is approved are considered, or
    • The borrower submits a forgiveness application supporting use of all PPP loan proceeds and creates an interest-bearing escrow account controlled by the PPP lender with funds equal to the balance of the PPP loan. The funds may be disbursed to pay any loan balance plus interest after the forgiveness process and any appeals are completed.

  • A sale of 50 percent or more of its assets if the borrower submits a forgiveness application supporting use of all PPP loan proceeds and creates an interest-bearing escrow account controlled by the PPP lender with funds equal to the balance of the PPP loan. The funds may be disbursed to pay any loan balance plus interest after the forgiveness process and any appeals are completed.

If the ownership change does not meet these criteria, borrowers will need SBA approval. Borrowers should work with their PPP lenders, who will be required to submit the following information to the SBA:

  • The reason the borrower cannot fully satisfy the PPP note or escrow the funds
  • Details of the ownership change transaction
  • A copy of the PPP loan documents
  • Any agreements or letters of intent
  • SBA loan number
  • A list of all individuals with a 20 percent or greater ownership stake in the purchasing entity

For sales of 50 percent or more of the assets, SBA approval will be based on the buyer assuming all PPP obligations, which must be reflected in the sale documents.

Whether or not SBA approval of the transfer of ownership is required, the PPP borrower will remain subject to all terms of the program. If the buyers or successor has a separate PPP loan, they will be responsible for segregating PPP funds and providing documentation supporting compliance of the use of funds by each borrower.

To read the Procedural Notice, visit https://home.treasury.gov/system/files/136/5000-20057.pdf. For questions or to discuss your PPP loan or its forgiveness, please contact your HBK advisor.

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The Current State of Relief and Tax Legislation

Date September 14, 2020
Authors Amy L. Dalen
Categories

It has been months since the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law, making significant changes to the tax code and creating administrative hurdles for employers, employees, and the unemployed. Since then, we have received piecemeal guidance from the government that both clarifies and confuses at the same time. And while everyone seems to agree that additional legislation is needed to help the country recover, the Congressional leaders have not been able to strike a compromise creating a legislative standstill.

The Latest Relief Bill

Senate Republicans recently introduced a new “skinny” relief bill, the Delivering Immediate Relief to America’s Families, Schools, and Small Businesses Act, that provides for an additional $300 per week in federal unemployment benefits while excluding a second round of stimulus payments and payroll tax relief. Additional Paycheck Protection Program (PPP) loan forgiveness is also included in the text of the bill. The bill went up for vote on Thursday and failed to pass.

Congressional Democrats criticized the bill as not providing enough relief given the current crisis the country is in. Back in May, the House passed the Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act, which provided significantly more relief for Americans, including additional stimulus payments. The HEROES Act did not pass the Senate, and Congress has been fighting over new legislation since it failed.

Biden’s Proposed Tax Changes

While Congress has been unable to move forward on legislation, Presidential Candidate Joe Biden has been releasing information on future potential tax changes as part of his campaign. His proposals have caused a flurry of year-end planning among affluent taxpayers.

On the individual income tax side, Biden is proposing to return the top tax bracket to 39.6 percent, and to increase the top marginal income tax rate on capital gains to 39.6 percent for taxpayers earning more than $1 million annually. Biden is also proposing to eliminate the basis step-up that many assets receive at the death of the owner. Eliminating this basis step-up would be an administrative challenge since records that would support the basis calculation may no longer be available or may be inaccessible by the persons receiving the assets at death.

On the business tax side, Biden is proposing to increase the corporate tax rate from the current rate of 21 percent to 28 percent, and to institute a minimum tax on corporations that have profits of $100 million or more. For passthrough entities, Biden is proposing to phase out the qualified business income (QBI) deduction for income that exceeds $400,000. The current QBI deduction only contains a phaseout for businesses that meet the definition of a specified service trade or business.

Tax Extender Legislation

Amidst the debate over relief legislation and the upcoming election, there is little talk of extending tax provisions that are set to expire at the end of the year. While it is possible that some tax provisions may be included in future relief legislation or other needed legislation, there does not appear to be the same urgency for tax extenders as there has been in past years.

One industry pushing Congress to take action on expiring tax provisions is the brewery industry. Without Congressional action, the excise tax rate on craft alcoholic beverages will revert to $13.50. The excise tax is currently $2.70 for the first 100,000 proof gallons, $13.36 on the next 22,130,000 proof gallons, and $13.50 on anything above that. This graduated rate structure was put in place as part of 2017 tax reform, and was later extended through December 31, 2020.

Conclusion

As we move closer to the end of the 2020 tax year, we encourage you to reach out to your HBK tax advisor to discuss potential tax changes that may be coming, and what these changes may mean for you. We will continue to keep you updated as relevant information becomes available.

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PPP Forgiveness: Five Considerations for Manufacturers

Date September 10, 2020
Authors Amy M. Reynallt
Categories

Many manufacturers are completing their Paycheck Protection Program (PPP) covered periods and seeing their lenders launch their PPP forgiveness portals. Much like the rush to apply for loan funding this spring, borrowers are now rushing to apply for forgiveness. Before joining the rush, consider the following:

  1. The right time to apply for forgiveness:

    According to the Paycheck Protection Program Flexibility Act (PPPFA) passed on June 5, 2020, a borrower has ten months after the last day of their covered period to apply for forgiveness.

    Some manufacturers may find it advantageous to apply before the end of the ten months, for example, if they have a business situation that calls for it, such as a transition of ownership. Others may decide that waiting for additional guidance provides them with the highest level of confidence that their loan can be forgiven.

    Manufacturers who have spent all their funds also might be inclined to apply before the end of their 24-week covered period. But they should be sure they have all the necessary documentation. In addition, guidance remains cloudy on certain mechanics of the calculation when applying early, so consider waiting until you are sure all aspects of your forgiveness application will comply with SBA guidance.

  2. Eligible costs for forgiveness:

    Some manufacturers prefer to reduce the burden of documenting their expenditures by using only payroll costs for their PPP loan forgiveness application. But think about your PPP loan as a part of your business strategy, not as a standalone tool. Will applying for forgiveness using only certain expenses reduce your access to benefits from other programs?

    For example, a tax credit is available to certain businesses that conduct R&D (research and development) activities. Given current guidance, it might be advisable to exclude costs from your PPP loan forgiveness application that you could use for the tax credit, thereby maximizing both PPP loan forgiveness and the tax credit. Other tax credits may interact with your PPP loan in a similar fashion.

    It is important to discuss your PPP loan forgiveness with your tax preparer and other key advisors to ensure you are considering all programs available to you.

  3. Full-time equivalent (FTE) restoration:

    FTE Safe Harbor #2 indicates that if you had a reduction in full-time equivalents (or FTEs) between February 15 and April 26, 2020, you have until the earlier of the date of your forgiveness application or December 31, 2020 to restore your FTE level so that the reduction will not affect your forgiveness amount. Some manufacturers, however, have regularly scheduled layoffs at the end of the year for maintenance, physical inventory or other operational requirements. If you are applying for forgiveness after the end of the calendar year, remember that your reduction elimination will be evaluated based on your FTEs as of December 31, 2020. Think carefully about employees who will be on your active payroll at that time, regardless of whether you intend to rehire them. Based on the mechanics of the calculation and FTE Safe Harbor #2 guidance, if you cannot prove those FTEs have been restored (based on your December 31 active payroll), you might not qualify for the safe harbor option.

  4. PPE eligibility for forgiveness:

    Currently, expenses eligible for forgiveness are payroll costs (including certain employer paid health insurance, retirement contributions, and state and local taxes), and rent, mortgage interest and utilities as defined by the program. Neither general manufacturing personal protective equipment (PPE) nor COVID-19-specific PPE and supplies are eligible for forgiveness.

    Like all program guidelines, the rule on PPE is subject to change. Proposals in Congress include allowing certain PPE costs as expenses eligible for forgiveness. However, because a borrower must follow all guidance available at the time of application, it is important to stay abreast of changes and understand what is current guidance versus what is only a proposal.

  5. Forgiveness applications do not guarantee forgiveness:

    Economic Injury Disaster Loan (EIDL) emergency advances (or grants), issued by the SBA will reduce PPP loan forgiveness by the amount of the advance (or grant), even if the forgiveness application indicates full forgiveness of the PPP loan. Manufacturers who participated in both programs should understand their obligations under each program.

    In addition, the SBA reserves the right to review all PPP loan applications for eligibility and loan amounts, as well as the PPP forgiveness applications for the forgiveness amounts. If the SBA determines you were not eligible for the loan, or if they determine that your loan or forgiveness amount was improperly calculated, you might not be granted full forgiveness. Manufacturers should discuss their concerns as they arise with their legal advisors or CPAs.

To discuss your PPP loan, its interaction with other programs, or other concerns regarding your manufacturing business, contact a member of HBK Manufacturing Solutions at manufacturing@hbkcpa.com or 330-758-8613.

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PPP Forgiveness: “Interim Final Rule” Addresses Compensation and Non-Payroll Costs

Date August 27, 2020
Authors Amy M. Reynallt
Categories

On August 24, the Small Business Administration (SBA) released a new Interim Final Rule pertaining to owner compensation and non-payroll costs eligible for Paycheck Protection Program forgiveness. Highlights of the rule include:

  • C-Corp or S-Corp owners with less than a 5 percent ownership stake are not subject to the owner-employee compensation rule. The SBA has made this rule because these owner-employees “have no meaningful ability to influence decisions over how loan proceeds are allocated”
  • Non-payroll costs attributable to the business operations of a tenant or sub-tenant of a PPP loan borrower are not eligible for forgiveness. The SBA example: If a borrower leases its building for $10,000 per month and subleases a portion of its physical space to another business for $2,500 per month, only $7,500 per month is eligible for loan forgiveness—assuming other eligible rent criteria are met. The same applies to mortgage interest and utility payments.
  • For home-based businesses, eligible non-payroll costs do not include household expenses. The SBA explains: “the borrower may include only the share of covered expenses that were deductible on the borrowers’ 2019 tax filings, or if a new business, the borrower’s expected 2020 tax filings.”
  • Related party rent is eligible for loan forgiveness as long as:
    • “The amount of loan forgiveness for rent or lease payments to a related party is no more than the amount of mortgage interest owed on the property during the Covered Period that is attributable to the space being rented by the business, and
    • The lease and mortgage were entered into prior to February 15, 2020.”
    Note that any common ownership between the business and the property owner is considered related party.
  • Mortgage interest payments to a related party are not eligible for loan forgiveness.

To read the full Interim Final Rule, visit https://home.treasury.gov/system/files/136/PPP–IFR–Treatment-Owners-Forgiveness-Certain-Nonpayroll-Costs.pdf.

For questions regarding your PPP loan forgiveness, please contact your HBK Advisor.

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SBA Issues New FAQs on PPP Forgiveness and More

Date August 10, 2020
Authors Amy M. Reynallt
Categories

On August 4, the Small Business Administration (SBA) and U.S. Treasury published 23 FAQs addressing aspects of the Payroll Protection Program (PPP), including payroll costs, nonpayroll costs, forgiveness reductions and other general information. FAQ highlights include:

  • Borrowers who submit their PPP loan forgiveness application within 10 months of the end of their “Covered Period” are not required to make payments until the forgiveness amount is remitted to the lender by the SBA. Borrowers receiving full forgiveness will not be responsible for any payments. A borrower receiving partial or no forgiveness will be required to pay the remaining balance of the loan, plus interest accrued from the loan disbursement date.
  • Eligible payroll costs and eligible nonpayroll costs incurred before the Covered Period but paid during the Covered Period are eligible for loan forgiveness. Similarly, payroll costs and nonpayroll costs incurred during the Covered Period but paid after the Covered Period could also be eligible for forgiveness if they are paid on or before the business’s next regular payroll or billing date.
  • Borrowers with twice monthly or less frequent payroll schedules might need to calculate payroll costs for partial pay periods to determine eligible payroll costs.
  • The employer portion of group healthcare benefits paid or incurred during the Covered Period or “Alternative Payroll Covered Period” are eligible for forgiveness. Forgiveness will not be granted for group health benefits accelerated from periods outside the Covered Period or Alternative Payroll Covered Period.
  • Employer contributions for retirement benefits paid or incurred during the Covered Period or Alternative Payroll Covered Period are eligible for forgiveness. Forgiveness will not be granted for retirement benefits accelerated from periods outside the Covered Period or Alternative Payroll Covered Period.
  • Owner compensation is capped at $15,385 per owner for the 8-week period or $20,833 per owner for the 24-week period. The limitation applies across all businesses in which the owner has an ownership stake. Owners can choose how to allocate that amount across their businesses.
  • Most rules applying to owner compensation were covered in the Interim Final Rule on Loan Forgiveness Interim Final Rule and SBA Loan Review Procedures Interim Final Rule dated June 22, 2020. However, the FAQs include an additional clarification: health insurance contributions for S Corporation owners with at least a 2 percent stake in the business are not eligible for forgiveness, nor are the contributions for family members. Instead, these amounts are considered part of the owners’ cash compensation.
  • Interest on unsecured credit is not eligible for loan forgiveness, although it is a permissible use of PPP loan funds.
  • If an eligible organization has a rent or interest payment for a mortgage loan that existed prior to February 15, 2020 but is renewed or refinanced after that date, the lease payments under the renewed lease or interest payments on the refinanced mortgage are eligible for forgiveness.
  • Transportation, which is included as a utility eligible for forgiveness, is defined as ‘transportation utility fees assessed by state or local governments.” For more information on transportation utility fees, visit: https://www.fhwa.dot.gov/ipd/value_capture/defined/transportation_utility_fees.aspx
  • Electricity supply charges are eligible for loan forgiveness. According to the FAQ, “The entire electricity bill is eligible for loan forgiveness, which may include supply charges, distribution charges, and other charges such as gross receipts taxes.”
  • When considering the full-time equivalent (FTE) employee reduction related to forgiveness, borrowers may exclude reductions that occur due to, “(1) an inability to rehire individuals who were employees of the borrower on February 15, 2020 and (2) an inability to hire similarly qualified individuals for unfilled positions on or before December 31, 2020.” Within 30 days of the employee’s rejection of the offer to rehire, borrowers must inform the applicable state unemployment insurance office. In addition, borrowers must maintain documentation, which could include a written offer to rehire the individual, a written record of the employee’s rejection of that offer, and a written record of efforts to hire a similarly qualified individual.
  • Seasonal employers should use the same 12-week period they used for calculating the maximum loan for the reference period for calculating any loan forgiveness reduction.
  • When calculating the forgiveness reduction related to salary/hourly wages, borrowers should only consider decreases in salaries or wages (not all forms of compensation).

For questions regarding your PPP loan or its forgiveness or for support with your PPP forgiveness application, please contact your HBK Advisor.

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