- If you are paying employees that are not working – you, the borrower, can establish the schedule. (Canon Comment: We would try and base it on some average if possible.)
- Bonuses and hazard pay are allowed. (Canon Comment: We would still shy away from arbitrary bonuses if possible. If there’s a business reason, or it’s standard this time of year, then go for it. Otherwise, we think there are better optics for using hazard pay.)
- Owner employees’ total forgiveness is capped at the lesser of 8/52 of 2019 compensation or $15,385.
- Corporate owner retirement and health insurance are indeed part of the forgivable amounts. Note – general partners or self-employed do not have additional forgiveness for these amounts. Their forgiveness is based on self-employment income, which already include these.
- Non-payroll costs can be PAID OR INCURRED. Thus, you may have three sets of utility bills, rent payments, etc. in your 56-day period. There will also be payments after your 56-day period that were INCURRED DURING your 56-day period. You’ll have the opportunity to deduct these if they are paid by their next normal billing cycle.
- Borrowers will not be doubly penalized for the salary/wage reduction related to FTE reduction. That is, if you cut a 40 hour person to 20 hours, but kept their hourly pay rate steady, you won’t get dinged for both the FTE reduction and the wage reduction. (Canon Comment: We are not sure how this works with the existing application. We are guessing this will be another “off-application” adjustment allowed – as long as it’s documented.)
Please also be aware that both the House and Senate are working on and are close to passing changes to the PPP Loan Program. Some items of note are to extend the 8-week period, extending the loan amortization period, and possibly scrapping the 75/25 percent test. So, stay tuned…