PPP Loan Forgiveness Update- This past weekend the SBA released the much-awaited PPP Loan Forgiveness Application. You can access it here:

Just prior to the release of the application we recorded a video explaining, in detail, how the loan forgiveness calculation works and we walk through the Tembo PPP Loan Forgiveness Calculator. Check it out below:

You can access the PPP Loan Forgiveness Calculator here:

Good news! After reviewing the loan forgiveness application and comparing it to our video (that we recorded 1 day before the application came out!), we only found a few things that need to be addressed:

• Owner compensation during the 8-week period is limited to the lesser of 2019 compensation or $100,000. Whichever applies is divided by 52, then multiplied by 8 to equal the maximum amount of qualified forgivable payroll expense for an owner during the 8-week period,
• There are two safe harbor rules related to headcount now:
  • If FTE headcount on 6/30/20 is equal to or greater than 2/15/20, then no headcount reduction shall apply, OR
  • If FTE headcount on the last day of the 8-week covered period is equal to or greater than 1/1/2020, then no headcount reduction shall apply
• The SBA is offering some leeway on the 8-week covered period dates. Here is how they have it structured:
  • Alternative Payroll Covered Period: For administrative convenience, Borrowers with a biweekly (or more frequent) payroll schedule may elect to calculate eligible payroll costs using the eight-week (56-day) period that begins on the first day of their first pay period following their PPP Loan Disbursement Date (the “Alternative Payroll Covered Period”).
  • For 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.
• They have provided some clarity on the “incurred and paid” language:
  • Payroll costs are considered paid on the day that paychecks are distributed or the day that 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 during the 8-week period and paid by the next normal pay cycle are includible even if the next pay date is immediately after the 8-week covered period ends.
  • 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

After having many, many conversations with clients over the past few weeks, and holding a webinar on the evening of May 12, we realize that many of you will need help with the PPP loan forgiveness calculations, maximization, and application. If the information in the video and the loan calculator is not sufficient for you to manage the calculation, we have designed a special services agreement in which you can engage Tembo to assist you in preparing the forgiveness calculation, the required documentation, and the required application to be submitted to the bank.

If you would like to engage Tembo in this special services agreement, please contact us at [email protected] and we will be more than happy to help you through this challenging structure created by the SBA and Treasury, and most importantly, help you minimize the portion of the loan that may be unforgivable and have to be repaid.

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