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Paycheck Protection Program
SBA Releases Loan Forgiveness Application

Updated 5-15-2020

On Friday, May 15, 2020, the SBA released the PPP Loan Forgiveness Application. The following are some of the key points of clarification in the application that we feel are most relevant for our clients and friends.


  • “Alternative Payroll Covered Period” allows borrowers to use the first pay date after loan disbursement as the beginning of the 8 week (56 day) covered period for payroll costs, as opposed to loan disbursement date. Note, forgivable interest, rent, and utilities still must be incurred within 8 weeks from the date of loan disbursement.


  • Compensation limit is maxed at $15,385 for all employees (8 week equivalent of $100,000 per year). Owner compensation is capped at $15,385 or the 8 week equivalent of their 2019 compensation, whichever is lower.

    • In other words, owners cannot give themselves raises compared to 2019


  • Ability to include expenses paid or incurred during the 8 week covered period.

    • In other words – Expenses incurred but not yet paid within the 8 week period can be included in forgiveness as long as they are paid in next payroll or billing cycle.


  • Step by step instructions for calculations including:

    • Full time equivalent (FTE) employees

    • FTE employee reduction calculation (reduction in forgiveness based on reduction of FTE)

    • Salary and wage reduction calculation (reduction in forgiveness based on wage/hour reduction)


  • FTE Reduction exceptions and Safe Harbor

    • Exceptions: The following situations will not reduce a borrower’s loan forgiveness: Good faith, written offer to rehire an employee during covered period; employees fired for cause; voluntary resignations; or a voluntary request for a reduction in hours

    • Safe Harbor: If FTE employees were reduced between February 15, 2020 and April 26, 2020, and restored FTE employee levels by June 30, 2020 to February 15, 2020 amounts, the borrower will not have its forgiveness reduced.


  • Detailed descriptions of support needed – Note that your bank may require additional information.

    • Payroll

      • Bank statements or third party payroll service provider reports

      • Federal and state quarterly tax forms

      • Payment receipt/ cancelled check, or account statements for health insurance and retirement contributions

    • FTE - Documentation calculating the number of average FTEs for the selected reference period

    • Non-payroll - Support provided will be for February 2020, during the covered period (8 weeks after loan disbursement), and for one month after the end of the covered period.

      • Mortgage interest: Amortization schedule and receipts or cancelled checks or lender account statements

      • Rent or lease: Lease agreement and receipts or cancelled checks or lessor account statements

      • Utilities: Invoices and receipts, cancelled checks or account statements.


Reminder: Only 25% of your forgiveness may be related to non-payroll expenses.

We at TJ Advisors are committed to bringing you the most relevant and up to date information in an effort to help your business stay on track during this period of uncertainty. Please note that not all provisions, exceptions, exclusions, and special circumstances are included in order to maintain brevity. Please reach out directly so that we can provide the business support you need in these unprecedented times. We are here for you, contact us today at or 972-629-9164.

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