COVID-19 Guide for Your Business

Below was sourced from the SBA’s Paycheck Protection Program Loan Forgiveness Application as of 5/15/2020

· Payroll: Documentation verifying the eligible cash compensation and non-cash benefit payments from the Covered Period or the Alternative Payroll Covered Period consisting of each of the following:

    a.       Bank account statements or third-party payroll service provider reports documenting the amount of cash compensation paid to employees.

    b.       Tax forms (or equivalent third-party payroll service provider reports) for the periods that overlap with the Covered Period or the Alternative Payroll Covered Period:

        i. Payroll tax filings reported, or that will be reported, to the IRS (typically, Form 941); and

        ii. State quarterly business and individual employee wage reporting and unemployment insurance tax filings reported, or that will be reported, to the relevant state.

    c.        Payment receipts, cancelled checks, or account statements documenting the amount of any employer contributions to employee health insurance and retirement plans that the Borrower included in the forgiveness amount (PPP Schedule A, lines (6) and (7)).

Below was sourced from the SBA’s Paycheck Protection Program Loan Forgiveness Application as of 5/15/2020

·  FTE: Documentation showing (at the election of the Borrower):

    a.     the average number of FTE employees on payroll per month employed by the Borrower between February 15, 2019 and June 30, 2019;

    b.    the average number of FTE employees on payroll per month employed by the Borrower between January 1, 2020 and February 29, 2020; or

    c.    in the case of a seasonal employer, the average number of FTE employees on payroll per month employed by the Borrower between February 15, 2019 and June 30, 2019; between January 1, 2020 and February 29, 2020; or any consecutive twelve-week period between May 1, 2019 and September 15, 2019.

·     The selected time period must be the same time period selected for purposes of completing PPP Schedule A, line 11. Documents may include payroll tax filings reported, or that will be reported, to the IRS (typically, Form 941) and state quarterly business and individual employee wage reporting and unemployment insurance tax filings reported, or that will be reported, to the relevant state. Documents submitted may cover periods longer than the specific time period.

Below was sourced from the SBA’s Paycheck Protection Program Loan Forgiveness Application as of 5/15/2020

· Nonpayroll: Documentation verifying existence of the obligations/services prior to February 15, 2020 and eligible payments from the Covered Period.

    a.  Business mortgage interest payments: Copy of lender amortization schedule and receipts or cancelled checks verifying eligible payments from the Covered Period; or lender account statements from February 2020 and the months of the Covered Period through one month after the end of the Covered Period verifying interest amounts and eligible payments.

    b. Business rent or lease payments: Copy of current lease agreement and receipts or cancelled checks verifying eligible payments from the Covered Period; or lessor account statements from February 2020 and from the Covered Period through one month after the end of the Covered Period verifying eligible payments.

    c.  Business utility payments: Copy of invoices from February 2020 and those paid during the Covered Period and receipts, cancelled checks, or account statements verifying those eligible payments.

Below was sourced from the SBA’s Paycheck Protection Program Loan Forgiveness Application as of 5/15/2020

· PPP Schedule A Worksheet or its equivalent and the following:

    a.  Documentation supporting the listing of each individual employee in PPP Schedule A Worksheet Table 1, including the “Salary/Hourly Wage Reduction” calculation, if necessary.

    b.   Documentation supporting the listing of each individual employee in PPP Schedule A Worksheet Table 2; specifically, that each listed employee received during any single pay period in 2019 compensation at an annualized rate of more than $100,000.

    c.   Documentation regarding any employee job offers and refusals, firings for cause, voluntary resignations, and written requests by any employee for reductions in work schedule.

    d.   Documentation supporting the PPP Schedule A Worksheet “FTE Reduction Safe Harbor.”

- All records relating to the Borrower’s PPP loan, including documentation submitted with its PPP loan application, documentation supporting the Borrower’s certifications as to the necessity of the loan request and its eligibility for a PPP loan, documentation necessary to support the Borrower’s loan forgiveness application, and documentation demonstrating the Borrower’s material compliance with PPP requirements. The Borrower must retain all such documentation in its files for six years after the date the loan is forgiven or repaid in full, and permit authorized representatives of SBA, including representatives of its Office of Inspector General, to access such files upon request.

b. Are salary, wages, or commission payments to furloughed employees; bonuses; or hazard pay during the covered period eligible for loan forgiveness?

Yes. The CARES Act defines the term ‘‘payroll costs’’ broadly to include compensation in the form of salary, wages, commissions, or similar compensation. If a borrower pays furloughed employees their salary, wages, or commissions during the covered period, those payments are eligible for forgiveness as long as they do not exceed an annual salary of $100,000, as prorated for the covered period. The Administrator, in consultation with the Secretary, has determined that this interpretation is consistent with the text of the statute and advances the paycheck protection purposes of the statute by enabling borrowers to continue paying their employees even if those employees are not able to perform their day-to-day duties, whether due to lack of economic demand or public health considerations. This intent is reflected throughout the statute, including in section 1106(d)(4) of the Act, which provides that additional wages paid to tipped employees are eligible for forgiveness. The Administrator, in consultation with the Secretary, has also determined that, if an employee’s total compensation does not exceed $100,000 on an annualized basis, the employee’s hazard pay and bonuses are eligible for loan forgiveness because they constitute a supplement to salary or wages, and are thus a similar form of compensation.

c. Are there caps on the amount of loan forgiveness available for owner employees and self-employed individuals’ own payroll compensation?

Yes, the amount of loan forgiveness requested for owner-employees and self-employed individuals’ payroll compensation can be no more than the lesser of 8/52 of 2019 compensation (i.e., approximately 15.38 percent of 2019 compensation) or $15,385 per individual in total across all businesses. See 85 FR 21747, 21750. In particular, owner-employees are capped by the amount of their 2019 employee cash compensation and employer retirement and health care contributions made on their behalf. Schedule C filers are capped by the amount of their owner compensation replacement, calculated based on 2019 net profit.3 General partners are capped by the amount of their 2019 net earnings from self-employment (reduced by claimed section 179 expense deduction, unreimbursed partnership expenses, and depletion from oil and gas properties) multiplied by 0.9235. No additional forgiveness is provided for retirement or health insurance contributions for self-employed individuals, including Schedule C filers and general partners, as such expenses are paid out of their net self-employment income.

g. If a borrower restores reductions made to employee salaries and wages or FTE employees by not later than June 30, 2020, can the borrower avoid a reduction in its loan forgiveness amount?

 Yes. Section 1106(d)(5) of the CARES Act provides that if certain employee salaries and wages were reduced between February 15, 2020 and April 26, 2020 (the safe harbor period) but the borrower eliminates those reductions by June 30, 2020 or earlier, the borrower is exempt from any reduction in loan forgiveness amount that would otherwise be required due to reductions in salaries and wages under section 1106(d)(3) of the CARES Act. Similarly, if a borrower eliminates any reductions in FTE employees occurring during the safe harbor period by June 30, 2020 or earlier, the borrower is exempt from any reduction in loan forgiveness amount that would otherwise be required due to reductions in FTE employees.

a. Will a borrower’s loan forgiveness amount be reduced if the borrower laid-off or reduced the hours of an employee, then offered to rehire the same employee for the same salary and same number of hours, or restore the reduction in hours, but the employee declined the offer?

No. Employees whom the borrower offered to rehire are generally exempt from the CARES Act’s loan forgiveness reduction calculation. This exemption is also available if a borrower previously reduced the hours of an employee and offered to restore the employee’s hours at the same salary or wages. Specifically, in calculating the loan forgiveness amount, a borrower may exclude any reduction in full-time equivalent employee headcount that is attributable to an individual employee if:

    i. The borrower made a good faith, written offer to rehire such employee (or, if applicable, restore the reduced hours of such employee) during the covered period or the alternative payroll covered period;

    ii. the offer was for the same salary or wages and same number of hours as earned by such employee in the last pay period prior to the separation or reduction in hours;

    iii. the offer was rejected by such employee;

    iv. the borrower has maintained records documenting the offer and its rejection; and

    v. the borrower informed the applicable state unemployment insurance office of such employee’s rejected offer of reemployment within 30 days of the employee’s rejection of the offer.4 The Administrator and the Secretary determined that this exemption is an appropriate exercise of their joint rulemaking authority to grant de minimis exemptions under section 1106(d)(6).5 Section 1106(d)(2) of the CARES Act reduces the amount of the PPP loan that may be forgiven if the borrower reduces full-time equivalent employees during the covered period as compared to a base period selected by the borrower. Section 1106(d)(5) of the CARES Act waives this reduction in the forgiveness amount if the borrower eliminates the reduction in full-time equivalent employees occurring during a different statutory reference period  by not later than June 30, 2020. The Administrator and the Secretary believe that the additional exemption set forth above is consistent with the purposes of the CARES Act and provides borrowers appropriate flexibility in the current economic climate. The Administrator, in consultation with the Secretary, have determined that the exemption is de minimis for two reasons. First, it is reasonable to anticipate that most laid-off employees will accept the offer of reemployment in light of current labor market conditions. Second, to the extent this exemption allows employers to cure FTE reductions attributable to terminations that occurred before February 15, 2020 (the start of the statutory FTE reduction safe harbor period), it is reasonable to anticipate those reductions will represent a relatively small portion of aggregate employees given the historically strong labor market conditions before the COVID–19 emergency.

Verifying eligible payroll from the covered period or the alternative payroll covered period.

Below was sourced from the SBA’s Paycheck Protection Program Loan Forgiveness Application as of 5/15/2020

· Payroll: Documentation verifying the eligible cash compensation and non-cash benefit payments from the Covered Period or the Alternative Payroll Covered Period consisting of each of the following:

    a. Bank account statements or third-party payroll service provider reports documenting the amount of cash compensation paid to employees.

    b. Tax forms (or equivalent third-party payroll service provider reports) for the periods that overlap with the Covered Period or the Alternative Payroll Covered Period:

        i. Payroll tax filings reported, or that will be reported, to the IRS (typically, Form 941); and

        ii. State quarterly business and individual employee wage reporting and unemployment insurance tax filings reported, or that will be reported, to the relevant state.

    c. Payment receipts, cancelled checks, or account statements documenting the amount of any employer contributions to employee health insurance and retirement plans that the Borrower included in the forgiveness amount (PPP Schedule A, lines (6) and (7)).

Showing full-time equivalent (FTE) employees from the same time period as the selected covered period or alternative payroll covered period.

Below was sourced from the SBA’s Paycheck Protection Program Loan Forgiveness Application as of 5/15/2020

· FTE: Documentation showing (at the election of the Borrower):

    a. the average number of FTE employees on payroll per month employed by the Borrower between February 15, 2019 and June 30, 2019;

    b. the average number of FTE employees on payroll per month employed by the Borrower between January 1, 2020 and February 29, 2020; or

    c. in the case of a seasonal employer, the average number of FTE employees on payroll per month employed by the Borrower between February 15, 2019 and June 30, 2019; between January 1, 2020 and February 29, 2020; or any consecutive twelve-week period between May 1, 2019 and September 15, 2019.

· The selected time period must be the same time period selected for purposes of completing PPP Schedule A, line 11. Documents may include payroll tax filings reported, or that will be reported, to the IRS (typically, Form 941) and state quarterly business and individual employee wage reporting and unemployment insurance tax filings reported, or that will be reported, to the relevant state. Documents submitted may cover periods longer than the specific time period.

Verifying non-payroll obligations/services prior to February 15, 2020 and eligible payments from the covered period.

Below was sourced from the SBA’s Paycheck Protection Program Loan Forgiveness Application as of 5/15/2020

· Nonpayroll: Documentation verifying existence of the obligations/services prior to February 15, 2020 and eligible payments from the Covered Period.

    a. Business mortgage interest payments: Copy of lender amortization schedule and receipts or cancelled checks verifying eligible payments from the Covered Period; or lender account statements from February 2020 and the months of the Covered Period through one month after the end of the Covered Period verifying interest amounts and eligible payments.

    b. Business rent or lease payments: Copy of current lease agreement and receipts or cancelled checks verifying eligible payments from the Covered Period; or lessor account statements from February 2020 and from the Covered Period through one month after the end of the Covered Period verifying eligible payments.

    c. Business utility payments: Copy of invoices from February 2020 and those paid during the Covered Period and receipts, cancelled checks, or account statements verifying those eligible payments.

Additional documentation that you must keep for at least 6 years after the date the loan is forgiven or repaid in full (page 10).

Below was sourced from the SBA’s Paycheck Protection Program Loan Forgiveness Application as of 5/15/2020

· PPP Schedule A Worksheet or its equivalent and the following:

    a. Documentation supporting the listing of each individual employee in PPP Schedule A Worksheet Table 1, including the “Salary/Hourly Wage Reduction” calculation, if necessary.

    b. Documentation supporting the listing of each individual employee in PPP Schedule A Worksheet Table 2; specifically, that each listed employee received during any single pay period in 2019 compensation at an annualized rate of more than $100,000.

    c. Documentation regarding any employee job offers and refusals, firings for cause, voluntary resignations, and written requests by any employee for reductions in work schedule.

    d. Documentation supporting the PPP Schedule A Worksheet “FTE Reduction Safe Harbor.”

· All records relating to the Borrower’s PPP loan, including documentation submitted with its PPP loan application, documentation supporting the Borrower’s certifications as to the necessity of the loan request and its eligibility for a PPP loan, documentation necessary to support the Borrower’s loan forgiveness application, and documentation demonstrating the Borrower’s material compliance with PPP requirements. The Borrower must retain all such documentation in its files for six (6) years after the date the loan is forgiven or repaid in full, and permit authorized representatives of SBA, including representatives of its Office of Inspector General, to access such files upon request.

• Bank statements or third-party payroll provider reports noting cash compensation paid to employees
• Payroll tax forms (typically IRS Form 941) showing employee wages, tips, and other compensation
• State quarterly tax forms
• Cancelled checks or bank statements documenting employer contributions to health insurance and retirement plans

• Copies of invoices
• Cancelled checks or bank statements verifying utility payments

• Bank statements listing the payee on the rent/lease agreement
• Rent/lease agreement identifying the payee

• Bank statements showing payments to the payee listed on the mortgage statement
• Mortgage statements identifying the payee

• Payroll tax forms (typically IRS Form 941) showing employee wages, tips and other compensation
• State quarterly tax forms

• Are salary, wages, or commission payments to furloughed employees; bonuses; or hazard pay during the covered period eligible for loan forgiveness?
• Yes. The CARES Act defines the term ‘‘payroll costs’’ broadly to include compensation in the form of salary, wages, commissions, or similar compensation. If a borrower pays furloughed employees their salary, wages, or commissions during the covered period, those payments are eligible for forgiveness as long as they do not exceed an annual salary of $100,000, as prorated for the covered period. The Administrator, in consultation with the Secretary, has determined that this interpretation is consistent with the text of the statute and advances the paycheck protection purposes of the statute by enabling borrowers to continue paying their employees even if those employees are not able to perform their day-to-day duties, whether due to lack of economic demand or public health considerations. This intent is reflected throughout the statute, including in section 1106(d)(4) of the Act, which provides that additional wages paid to tipped employees are eligible for forgiveness. The Administrator, in consultation with the Secretary, has also determined that, if an employee’s total compensation does not exceed $100,000 on an annualized basis, the employee’s hazard pay and bonuses are eligible for loan forgiveness because they constitute a supplement to salary or wages, and are thus a similar form of compensation.

• The dollar amount for which forgiveness is requested:
  • if a 24-week Covered Period applies, does not exceed 2.5 months’ worth of 2019 compensation for any owner-employee or self-employed individual/general partner, capped at $20,833 per individual; and if the Borrower has elected an 8-week Covered Period, does not exceed 8 weeks’ worth of 2019 compensation for any owner-employee or self-employed individual/general partner, capped at $15,385 per individual.

Verifying the eligible cash compensation and non-cash benefits payments from the Covered Period or the Alternative Payroll Covered Period:

• Bank statements or third-party payroll provider reports noting cash compensation paid to employees
• Payroll tax forms (typically IRS Form 941) showing employee wages, tips, and other compensation
• State quarterly tax forms
• Cancelled checks or bank statements documenting employer contributions to health insurance and retirement plans

Verifying the existence of the obligations/services prior to February 15, 2020 and eligible payments from the Covered Period.

• For business utilities:
  • Copy of invoices from February 2020
  • Copy of invoices from the Covered Period
  • Receipts or cancelled checks
  • Account statements
• For business rent or lease:
  • Copy of current lease agreement
  • Receipts or cancelled checks
  • Lessor account statements from February 2020 and from the Covered Period through the month after the end of the Covered Period
• For business mortgage interest:
  • Copy of lender amortization schedule
  • Receipts or cancelled checks
  • Lender account statements from February 2020 and the months of the Covered Period through one month after the end of the Covered Period

Documents supporting the average number of FTE employees (not required if you don’t have employees)

• Payroll tax forms (typically IRS Form 941) showing employee wages, tips and other compensation
• State quarterly tax forms

• Are salary, wages, or commission payments to furloughed employees; bonuses; or hazard pay during the covered period eligible for loan forgiveness?
• Yes. The CARES Act defines the term ‘‘payroll costs’’ broadly to include compensation in the form of salary, wages, commissions, or similar compensation. If a borrower pays furloughed employees their salary, wages, or commissions during the covered period, those payments are eligible for forgiveness as long as they do not exceed an annual salary of $100,000, as prorated for the covered period. The Administrator, in consultation with the Secretary, has determined that this interpretation is consistent with the text of the statute and advances the paycheck protection purposes of the statute by enabling borrowers to continue paying their employees even if those employees are not able to perform their day-to-day duties, whether due to lack of economic demand or public health considerations. This intent is reflected throughout the statute, including in section 1106(d)(4) of the Act, which provides that additional wages paid to tipped employees are eligible for forgiveness. The Administrator, in consultation with the Secretary, has also determined that, if an employee’s total compensation does not exceed $100,000 on an annualized basis, the employee’s hazard pay and bonuses are eligible for loan forgiveness because they constitute a supplement to salary or wages, and are thus a similar form of compensation.

• The dollar amount for which forgiveness is requested:
  • if a 24-week Covered Period applies, does not exceed 2.5 months’ worth of 2019 compensation for any owner-employee or self-employed individual/general partner, capped at $20,833 per individual; and
  • if the Borrower has elected an 8-week Covered Period, does not exceed 8 weeks’ worth of 2019 compensation for any owner-employee or self-employed individual/general partner, capped at $15,385 per individual

If you meet one of these two rules, then you may be exempt from any loan forgiveness reduction based on a reduction in your FTE employee levels:

FTE Reduction Safe Harbor 1:

If in good faith, you are able to document that you were unable to operate between February 15, 2020, and the end of the Covered Period at the same level of business activity as before February 15, 2020, due to compliance with requirements established or guidance issued between March 1, 2020 and December 31, 2020, by the Secretary of Health and Human Services, the Director of the Centers for Disease Control and Prevention, or the Occupational Safety and Health Administration, related to the maintenance of standards for sanitation, social distancing, or any other worker or customer safety requirement related to COVID-19.

FTE Reduction Safe Harbor 2:

· You reduced your FTE employee levels in the period beginning February 15, 2020, and ending April 26, 2020; AND

· You then restored your FTE employee levels by not later than December 31, 2020 to your FTE employee levels in the pay period that included February 15, 2020.

Verifying the eligible cash compensation and non-cash benefits payments from the Covered Period or the Alternative Payroll Covered Period:

• Bank statements or third-party payroll provider reports noting cash compensation paid to employees
• Payroll tax forms (typically IRS Form 941) showing employee wages, tips, and other compensation
• State quarterly tax forms
• Cancelled checks or bank statements documenting employer contributions to health insurance and retirement plans

Verifying the existence of the obligations/services prior to February 15, 2020 and eligible payments from the Covered Period.

• For business utilities:
  • Copy of invoices from February 2020 and those paid during the Covered Period and receipts, cancelled checks, or account statements verifying those eligible payments.
• For business rent or lease:
  • Copy of current lease agreement and receipts or cancelled checks verifying eligible payments from the Covered Period; or lessor account statements from February 2020 and from the Covered Period through one month after the end of the Covered Period verifying eligible payments.
• For business mortgage interest:
  • Copy of lender amortization schedule and receipts or cancelled checks verifying eligible payments from the Covered Period; or lender account statements from February 2020 and the months of the Covered Period through one month after the end of the Covered Period verifying interest amounts and eligible payments. 

Documents supporting the average number of FTE employees (not required if you don’t have employees) during the Covered Period or Alternative Payroll Covered Period and reference period. Documents may include:

• Payroll tax forms (typically IRS Form 941) showing employee wages, tips and other compensation.
• State quarterly tax forms.
• Individual employee wage reporting.
• Unemployment insurance tax filings reported.

• Are salary, wages, or commission payments to furloughed employees; bonuses; or hazard pay during the covered period eligible for loan forgiveness?
• Yes. The CARES Act defines the term ‘‘payroll costs’’ broadly to include compensation in the form of salary, wages, commissions, or similar compensation. If a borrower pays furloughed employees their salary, wages, or commissions during the covered period, those payments are eligible for forgiveness as long as they do not exceed an annual salary of $100,000, as prorated for the covered period.

The Administrator, in consultation with the Secretary, has also determined that, if an employee’s total compensation does not exceed $100,000 on an annualized basis, the employee’s hazard pay and bonuses are eligible for loan forgiveness because they constitute a supplement to salary or wages, and are thus a similar form of compensation.

Tables 1 and 2 of the Schedule A Worksheet on Form 3508 -- on pages 3 and 4 -- may help you calculate your payroll costs.

• The total amount of cash compensation eligible for Forgiveness may not exceed $100,000 a year per employee. So if you’re using the 8-week Covered Period, you can receive Forgiveness for no more than $15,385 per employee. If you’re using the 24-week period, you can receive Forgiveness for no more than $46,154 per employee.
• For an owner-employee, self-employed individual, or general partner using the 8-week Covered Period, eligible compensation is capped at $15,385 per individual or the 8-week equivalent of their applicable compensation in 2019, whichever is lower. If using the 24-week Covered Period, eligible compensation is capped at $20,833 per individual or the 2.5-month equivalent of their applicable compensation in 2019, whichever is lower.

The Loan Forgiveness Form 3508 Instructions for Borrowers has information on Average FTE calculations on page 4 that may help.

If you meet one of these two rules, then you may be exempt from any loan forgiveness reduction based on a reduction in your FTE employee levels:

FTE Reduction Safe Harbor 1:

If in good faith, you are able to document that you were unable to operate between February 15, 2020, and the end of the Covered Period at the same level of business activity as before February 15, 2020, due to compliance with requirements established or guidance issued between March 1, 2020 and December 31, 2020, by the Secretary of Health and Human Services, the Director of the Centers for Disease Control and Prevention, or the Occupational Safety and Health Administration, related to the maintenance of standards for sanitation, social distancing, or any other worker or customer safety requirement related to COVID-19.

FTE Reduction Safe Harbor 2:

· You reduced your FTE employee levels in the period beginning February 15, 2020, and ending April 26, 2020; AND

· You then restored your FTE employee levels by not later than December 31, 2020 to your FTE employee levels in the pay period that included February 15, 2020.

Verifying the eligible cash compensation and non-cash benefits payments from the Covered Period or the Alternative Payroll Covered Period:

• Bank statements or third-party payroll provider reports noting cash compensation paid to employees
• Payroll tax forms (typically IRS Form 941) showing employee wages, tips, and other compensation
• State quarterly tax forms
• Cancelled checks or bank statements documenting employer contributions to health insurance and retirement plans

Verifying the existence of the obligations/services prior to February 15, 2020 and eligible payments from the Covered Period.

• For business utilities:
  • Copy of invoices from February 2020 and those paid during the Covered Period and receipts, cancelled checks, or account statements verifying those eligible payments.
• For business rent or lease:
  • Copy of current lease agreement and receipts or cancelled checks verifying eligible payments from the Covered Period; or lessor account statements from February 2020 and from the Covered Period through one month after the end of the Covered Period verifying eligible payments.
• For business mortgage interest:
  • Copy of lender amortization schedule and receipts or cancelled checks verifying eligible payments from the Covered Period; or lender account statements from February 2020 and the months of the Covered Period through one month after the end of the Covered Period verifying interest amounts and eligible payments. 

Documents supporting the average number of FTE employees (not required if you don’t have employees) during the Covered Period or Alternative Payroll Covered Period and reference period. Documents may include:

• Payroll tax forms (typically IRS Form 941) showing employee wages, tips and other compensation.
• State quarterly tax forms.
• Individual employee wage reporting.
• Unemployment insurance tax filings reported.

• Familiarize yourself with the SBA Loan Forgiveness Form 3508EZ Instructions to understand if you can use Form 3508EZ.
  
• You are not required to complete Form 3508EZ or 3508 before starting your online Forgiveness request. You will need to provide this information when requesting Forgiveness through the JPMorgan Chase portal.
• If Form 3508 applies, then you must complete the PPP Schedule A Worksheet before requesting Forgiveness.
• If you have a payroll provider, request a payroll report from them.

Tables 1 and 2 of the Schedule A Worksheet on Form 3508 -- on pages 3 and 4 -- may help you calculate your payroll costs.

• The total amount of cash compensation eligible for Forgiveness may not exceed $100,000 a year per employee. So if you’re using the 8-week Covered Period, you can receive Forgiveness for no more than $15,385 per employee. If you’re using the 24-week period, you can receive Forgiveness for no more than $46,154 per employee.
• For an owner-employee, self-employed individual, or general partner using the 8-week Covered Period, eligible compensation is capped at $15,385 per individual or the 8-week equivalent of their applicable compensation in 2019, whichever is lower. If using the 24-week Covered Period, eligible compensation is capped at $20,833 per individual or the 2.5-month equivalent of their applicable compensation in 2019, whichever is lower.

The Loan Forgiveness Form 3508 Instructions for Borrowers has information on Average FTE calculations on page 4 that may help.

If you meet one of these two rules, then you may be exempt from any loan forgiveness reduction based on a reduction in your FTE employee levels:

FTE Reduction Safe Harbor 1:

If in good faith, you are able to document that you were unable to operate between February 15, 2020, and the end of the Covered Period at the same level of business activity as before February 15, 2020, due to compliance with requirements established or guidance issued between March 1, 2020 and December 31, 2020, by the Secretary of Health and Human Services, the Director of the Centers for Disease Control and Prevention, or the Occupational Safety and Health Administration, related to the maintenance of standards for sanitation, social distancing, or any other worker or customer safety requirement related to COVID-19.

FTE Reduction Safe Harbor 2:

· You reduced your FTE employee levels in the period beginning February 15, 2020, and ending April 26, 2020; AND

· You then restored your FTE employee levels by not later than December 31, 2020 to your FTE employee levels in the pay period that included February 15, 2020.

Verifying the eligible cash compensation and non-cash benefits payments from the Covered Period or the Alternative Payroll Covered Period:

• Bank statements or third-party payroll provider reports noting cash compensation paid to employees
• Payroll tax forms (typically IRS Form 941) showing employee wages, tips, and other compensation
• State quarterly tax forms
• Cancelled checks or bank statements documenting employer contributions to health insurance and retirement plans

Verifying the existence of the obligations/services prior to February 15, 2020 and eligible payments from the Covered Period.

• For business utilities:
  • Copy of invoices from February 2020 and those paid during the Covered Period and receipts, cancelled checks, or account statements verifying those eligible payments.
• For business rent or lease:
  • Copy of current lease agreement and receipts or cancelled checks verifying eligible payments from the Covered Period; or lessor account statements from February 2020 and from the Covered Period through one month after the end of the Covered Period verifying eligible payments.
• For business mortgage interest:
  • Copy of lender amortization schedule and receipts or cancelled checks verifying eligible payments from the Covered Period; or lender account statements from February 2020 and the months of the Covered Period through one month after the end of the Covered Period verifying interest amounts and eligible payments. 

Documents supporting the average number of FTE employees (not required if you don’t have employees) during the Covered Period or Alternative Payroll Covered Period and reference period. Documents may include:

• Payroll tax forms (typically IRS Form 941) showing employee wages, tips and other compensation.
• State quarterly tax forms.
• Individual employee wage reporting.
• Unemployment insurance tax filings reported.

• Familiarize yourself with the SBA Loan Forgiveness Form 3508EZ Instructions to understand if you can use Form 3508EZ.
  
• You are not required to complete Form 3508EZ or 3508 before starting your online Forgiveness request. You will need to provide this information when requesting Forgiveness through the JPMorgan Chase portal.
• If Form 3508 applies, then you must complete the PPP Schedule A Worksheet before requesting Forgiveness.
• If you have a payroll provider, request a payroll report from them.

Tables 1 and 2 of the Schedule A Worksheet on Form 3508 -- on pages 3 and 4 -- may help you calculate your payroll costs.

• The total annual amount of cash compensation eligible for Forgiveness may not exceed $100,000 per employee. So if you’re using the 8-week Covered Period, you can receive Forgiveness for no more than $15,385 per employee. If you’re using the 24-week period, you can receive Forgiveness for no more than $46,154 per employee.
• For an owner-employee, self-employed individual, or general partner using the 8-week Covered Period, eligible compensation is capped at $15,385 per individual or the 8-week equivalent of their applicable compensation in 2019, whichever is lower. If using the 24-week Covered Period, eligible compensation is capped at $20,833 per individual or the 2.5-month equivalent of their applicable compensation in 2019, whichever is lower.

Owner compensation limits are the same for both Form 3508EZ and full Form 3508.

The Loan Forgiveness Form 3508 Instructions for Borrowers has information on Average FTE calculations on page 4 that may help.

If you meet one of these two rules, then you may be exempt from any loan forgiveness reduction based on a reduction in your FTE employee levels:

FTE Reduction Safe Harbor 1:

If in good faith, you are able to document that you were unable to operate between February 15, 2020, and the end of the Covered Period at the same level of business activity as before February 15, 2020, due to compliance with requirements established or guidance issued between March 1, 2020 and December 31, 2020, by the Secretary of Health and Human Services, the Director of the Centers for Disease Control and Prevention, or the Occupational Safety and Health Administration, related to the maintenance of standards for sanitation, social distancing, or any other worker or customer safety requirement related to COVID-19.

FTE Reduction Safe Harbor 2:

· You reduced your FTE employee levels in the period beginning February 15, 2020, and ending April 26, 2020; AND

· You then restored your FTE employee levels by not later than December 31, 2020 to your FTE employee levels in the pay period that included February 15, 2020.

Verifying the eligible cash compensation and non-cash benefits payments from the Covered Period or the Alternative Payroll Covered Period:

• Bank statements or third-party payroll provider reports noting cash compensation paid to employees
• Payroll tax forms (typically IRS Form 941) showing employee wages, tips, and other compensation
• State quarterly tax forms
• Cancelled checks or bank statements documenting employer contributions to health insurance and retirement plans

Verifying the existence of the obligations/services prior to February 15, 2020 and eligible payments from the Covered Period.

• For business utilities:
  • Copy of invoices from February 2020 and those paid during the Covered Period and receipts, cancelled checks, or account statements verifying those eligible payments.
• For business rent or lease:
  • Copy of current lease agreement and receipts or cancelled checks verifying eligible payments from the Covered Period; or lessor account statements from February 2020 and from the Covered Period through one month after the end of the Covered Period verifying eligible payments.
• For business mortgage interest:
  • Copy of lender amortization schedule and receipts or cancelled checks verifying eligible payments from the Covered Period; or lender account statements from February 2020 and the months of the Covered Period through one month after the end of the Covered Period verifying interest amounts and eligible payments. 

Documents supporting the average number of FTE employees (not required if you don’t have employees) during the Covered Period or Alternative Payroll Covered Period and reference period. Documents may include:

• Payroll tax forms (typically IRS Form 941) showing employee wages, tips and other compensation.
• State quarterly tax forms.
• Individual employee wage reporting.
• Unemployment insurance tax filings reported.

• Familiarize yourself with the SBA Loan Forgiveness Form 3508EZ Instructions to understand if you can use Form 3508EZ.
  
• You are not required to complete Form 3508EZ or 3508 before starting your online Forgiveness request. You will need to provide this information when requesting Forgiveness through the JPMorgan Chase portal.
• If Form 3508 applies, then you must complete the PPP Schedule A Worksheet before requesting Forgiveness.
• If you have a payroll provider, request a payroll report from them.

Tables 1 and 2 of the Schedule A Worksheet on Form 3508 -- on pages 3 and 4 -- may help you calculate your payroll costs.

• The total annual amount of cash compensation eligible for Forgiveness may not exceed $100,000 per employee. So if you’re using the 8-week Covered Period, you can receive Forgiveness for no more than $15,385 per employee. If you’re using the 24-week period, you can receive Forgiveness for no more than $46,154 per employee.
• For an owner-employee, self-employed individual, or general partner using the 8-week Covered Period, eligible compensation is capped at $15,385 per individual or the 8-week equivalent of their applicable compensation in 2019, whichever is lower. If using the 24-week Covered Period, eligible compensation is capped at $20,833 per individual or the 2.5-month equivalent of their applicable compensation in 2019, whichever is lower.

Owner compensation limits are the same for both Form 3508EZ and full Form 3508.

The Loan Forgiveness Form 3508 Instructions for Borrowers has information on Average FTE calculations on page 4 that may help.

If you meet one of these two rules, then you may be exempt from any loan forgiveness reduction based on a reduction in your FTE employee levels:

FTE Reduction Safe Harbor 1:

If in good faith, you are able to document that you were unable to operate between February 15, 2020, and the end of the Covered Period at the same level of business activity as before February 15, 2020, due to compliance with requirements established or guidance issued between March 1, 2020 and December 31, 2020, by the Secretary of Health and Human Services, the Director of the Centers for Disease Control and Prevention, or the Occupational Safety and Health Administration, related to the maintenance of standards for sanitation, social distancing, or any other worker or customer safety requirement related to COVID-19.

FTE Reduction Safe Harbor 2:

· You reduced your FTE employee levels in the period beginning February 15, 2020, and ending April 26, 2020; AND

· You then restored your FTE employee levels by not later than December 31, 2020 to your FTE employee levels in the pay period that included February 15, 2020.

Verifying the eligible cash compensation and non-cash benefits payments from the Covered Period or the Alternative Payroll Covered Period:

• Bank statements or third-party payroll provider reports noting cash compensation paid to employees
• Payroll tax forms (typically IRS Form 941) showing employee wages, tips, and other compensation
• State quarterly tax forms
• Cancelled checks or bank statements documenting employer contributions to health insurance and retirement plans

Verifying the existence of the obligations/services prior to February 15, 2020 and eligible payments from the Covered Period.

• For business utilities:
  • Copy of invoices from February 2020 and those paid during the Covered Period and receipts, cancelled checks, or account statements verifying those eligible payments.
• For business rent or lease:
  • Copy of current lease agreement and receipts or cancelled checks verifying eligible payments from the Covered Period; or lessor account statements from February 2020 and from the Covered Period through one month after the end of the Covered Period verifying eligible payments.
• For business mortgage interest:
  • Copy of lender amortization schedule and receipts or cancelled checks verifying eligible payments from the Covered Period; or lender account statements from February 2020 and the months of the Covered Period through one month after the end of the Covered Period verifying interest amounts and eligible payments. 

Documents supporting the average number of FTE employees (not required if you don’t have employees) during the Covered Period or Alternative Payroll Covered Period and reference period. Documents may include:

• Payroll tax forms (typically IRS Form 941) showing employee wages, tips and other compensation.
• State quarterly tax forms.
• Individual employee wage reporting.
• Unemployment insurance tax filings reported.

• Familiarize yourself with the SBA Loan Forgiveness Form 3508EZ Instructions to understand if you can use Form 3508EZ.
  
• You are not required to complete Form 3508EZ or 3508 before starting your online Forgiveness request. You will need to provide this information when requesting Forgiveness through the JPMorgan Chase portal.
• If Form 3508 applies, then you must complete the PPP Schedule A Worksheet before requesting Forgiveness.
• If you have a payroll provider, request a payroll report from them.

Guidance for questions concerning requesting Forgiveness from the SBA Paycheck Protection Program

1. What to Document
2. What to Prepare
   1.  Loan Forgiveness and Your Employees
      
3. Requesting Loan Forgiveness
4. What to Expect After Requesting Forgiveness

The following information is based on Paycheck Protection Program Loan Forgiveness legislation as of June 5 and is subject to change.

What to Document

What to Prepare

Loan Forgiveness and Your Employees

Requesting Loan Forgiveness

What to Expect After Requesting Forgiveness

The SBA does not require a separate account. 

The Covered Period is either:

• The 24-week (168-day) period beginning on the PPP Loan Disbursement Date, or
• The 8-week (56-day) period beginning on the PPP Loan Disbursement Date if you received your PPP loan before June 5, 2020, and elect to use an eight-week (56-day) Covered Period.

For example, if you are using a 24-week Covered Period and received your PPP loan proceeds on Monday, April 20, the first day of the Covered Period is April 20 and the last day of the Covered Period is Sunday, October 4.

The Covered Period cannot extend beyond December 31, 2020.

It’s an additional choice for companies that have a biweekly (or more frequent) payroll schedule. You can always choose the Covered Period.

For loans funded before June 5, 2020:

• You may elect to calculate eligible payroll costs using either:
  • the 24-week (168-day) period that begins on the first day of your first pay period following their PPP Loan Disbursement Date
  • the eight-week (56-day) period) that begins on the first day of your first pay period following their PPP Loan Disbursement Date.

For loans funded on June 5, 2020 or later:

You may elect to calculate eligible payroll costs using the 24-week (168-day) period that begins on the first day of your first pay period following their PPP Loan Disbursement Date.

For example, if you are using a 24-week Alternative Payroll Covered Period and 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, October 10.

If you elect to use any Alternative Payroll Covered Period, you must:

• Apply the Alternative Payroll Covered Period wherever there is a reference in this application to “the Covered Period or the Alternative Payroll Covered Period.”

However, you must apply the Covered Period -- not the Alternative Payroll Covered Period -- wherever there is a reference in this application to “the Covered Period” only. The Alternative Payroll Covered Period cannot extend beyond December 31, 2020.

It begins on the date loan funds were deposited into your account -- look for the ACH credit for SMALL BUSINESS N/A CREDIT PPD in your transaction history. If using the Alternative Payroll Covered Period, it starts the first day of your first pay period following your loan disbursement date.

Under current SBA guidance:

• You must use at least 60% of funds for eligible payroll costs to qualify for full loan forgiveness, down from 75%
• You can use up to 40% of funds for eligible non-payroll costs, up from 25%

You need to use the funds within the Covered Period or Alternative Covered Period. 

Yes, for the portion that meets all the SBA rules and if the SBA approves your request for Forgiveness.

Based on the latest SBA announcements, you may be eligible for partial Forgiveness. However, since you can only request Forgiveness once, it would be beneficial to use all of your funds before requesting Forgiveness. 

Payroll costs consist of compensation to your employees (whose principal place of residence is the United States) in the form of salary, wages, commissions, or similar compensation; cash tips or the equivalent (based on employer records of past tips or, in the absence of such records, a reasonable, good-faith employer estimate of such tips); payment for vacation, parental, family, medical, or sick leave; allowance for separation or dismissal; payment for the provision of employee benefits consisting of group health care coverage, including insurance premiums, and retirement; payment of state and local taxes assessed on compensation of employees; and for an independent contractor or sole proprietor, wages, commissions, income, or net earnings from self-employment, or similar compensation. 

You are generally eligible for payroll costs paid and payroll costs incurred during the Covered Period or Alternative Payroll Covered Period. Payroll costs are considered:

• Paid on the day that paychecks are distributed or you originate an ACH credit transaction or
• Incurred on the day that your employees’ pay is earned

Yes.

Yes, your eligibility shouldn’t be affected by this.  See FAQ 10 for the acceptable documents

According to the SBA’s Instructions for PPP Schedule A, the following payroll costs are eligible for Forgiveness if incurred during the Covered or Alternative Payroll Covered Periods: 

• Employer contributions for employee health insurance, including employer contributions to a self-insured, employer-sponsored group health plans
• Employer contributions to employee retirement plans, including pension plans
• Employer state and local taxes assessed on employee compensation (e.g., state unemployment insurance tax)

The following are not eligible for Forgiveness: 

• Employee contributions -- either pre-tax or after-tax -- to health insurance and/or retirement plans
• Employer contributions made on behalf of a self-employed individual, general partners, or owner-employees of an S-corporation, because such payments are already included in their compensation
• Any taxes withheld from employee earnings

The SBA states the below categories are eligible if service began before February 15, 2020:

• phone
• internet
• gas
• water
• electricity
• transportation

Please visit SBA.gov or Treasury.gov for any updates.

No. However, mortgage interest payments do qualify as a non-payroll cost.

Yes – if the borrow does not own the property, they need to submit a rent or lease agreement.

No.

Yes, so long as at least 60% of the funds requested for Forgiveness are used for eligible payroll costs and no more than up to 40% of funds requested for Forgiveness are used for eligible non-payroll costs.

• Business mortgage interest payments: Copy of lender amortization schedule and receipts or cancelled checks verifying eligible payments from the Covered Period; or lender account statements from February 2020 and the months of the Covered Period through one month after the end of the Covered Period verifying interest amounts and eligible payments.
• Business rent or lease payments: Copy of current lease agreement and receipts or cancelled checks verifying eligible payments from the Covered Period; or lessor account statements from February 2020 and from the Covered Period through one month after the end of the Covered Period verifying eligible payments. 
• Business utility payments: Copy of invoices from February 2020 and those paid during the Covered Period and receipts, cancelled checks, or account statements verifying those eligible payments.

No.

No. You must request Forgiveness through the JPMorgan Chase online portal.

Yes. There is no prepayment penalty.

An EIDL grant – in amounts up to $10,000 -- is not refinanced by a PPP Loan. It will cause the SBA to reduce the amount of the PPP Loan eligible for Forgiveness.

The SBA must consent to the change of ownership and/or any assignment of the PPP obligation to a new borrower.  JPMorgan Chase cannot provide guidance on how this will affect eligibility for Forgiveness.

Documents may include payroll tax filings reported, or that will be reported, to the IRS (typically, Form 941) and state quarterly business and individual employee wage reporting and unemployment insurance tax filings reported, or that will be reported. Documents submitted may cover periods longer than the specific time period.

The selected time period must be the same time period selected for purposes of completing PPP Schedule A, line 11.

• The average number of FTE employees on payroll per week you employed between February 15, 2019 and June 30, 2019;
• The average number of FTE employees on payroll per week you employed between January 1, 2020 and February 29, 2020; or
• In the case of a seasonal employer, the average number of FTE employees on payroll per week you employed between February 15, 2019 and June 30, 2019; between January 1, 2020 and February 29, 2020; or any consecutive 12-week period between May 1, 2019 and September 15, 2019. 

It may be reduced if your average weekly FTE employees during the Covered Period or Alternative Payroll Covered Period was less than during your chosen reference period and doesn’t meet Full-time Equivalency (FTE) Reduction Safe Harbor rules.

It exempts you from the Loan Forgiveness reduction based on FTE employee levels if you document:

• Any positions for which you made a good-faith, written offer to rehire an individual who was an employee on February 15, 2020 and you were unable to hire similarly qualified employees for unfilled positions on or before December 31, 2020;
• Any positions for which you made a good-faith, written offer to restore any reduction in hours, at the same salary or wages, during the Covered Period or the Alternative Covered Period and the employee rejected the offer, and
• Any employees who during the Covered Period or the Alternative Payroll Covered Period
  • Were fired for cause
  • Voluntarily resigned,
  • Voluntarily requested and received a reduction of their hours. In all of these cases, include these FTEs on this line only if the position was not filled by a new employee. 

They apply if you meet either Safe Harbor 1 or 2: 

FTE Reduction Safe Harbor 1: In good faith, you are able to document that you were unable to operate between February 15, 2020, and the end of the Covered Period at the same level of business activity as before February 15, 2020, due to compliance with requirements established or guidance issued between March 1, 2020 and December 31, 2020, by the Secretary of Health and Human Services, the Director of the Centers for Disease Control and Prevention, or the Occupational Safety and Health Administration, related to the maintenance of standards for sanitation, social distancing, or any other worker or customer safety requirement related to COVID-19.

FTE Reduction Safe Harbor 2:

• You reduced your FTE employee levels in the period beginning February 15, 2020, and ending April 26, 2020; AND
• You then restored your FTE employee levels by not later than December 31, 2020 to your FTE employee levels in the pay period that included February 15, 2020. 

If you added to your FTE employment levels and maintained similar salary and wage levels, it should not affect your ability to request Forgiveness. 

Businesses that received a PPP loan need to request Forgiveness through the bank that processed their loan. If you received a PPP loan through us, you’ll work with us to submit your Forgiveness request as well. We will keep you informed as we get additional SBA guidance and notify you when it’s time to submit.

You can request Forgiveness once you have spent all of the money. While you don't have to wait until the end of your Covered Period, you may have to make certain certifications to the SBA regarding the entire Covered Period.

We will pre-fill your standard business information, as well as:

• SBA PPP Loan Number
• JPMorgan Chase PPP Loan Number
• PPP Loan Disbursement Date

You may be able to use Form 3508EZ if you:

• Are self-employed and have no employees; or
• Did not reduce the salaries or wages of your employees by more than 25%, and did not reduce the number or hours of your employees; or
• Experienced reductions in business activity as a result of health directives related to COVID-19, and did not reduce the salaries or wages of your employees by more than 25%.

Otherwise, you may have to use Form 3508.

You must submit eligible payroll and non-payroll costs on the SBA Form 3508EZ.  You may choose to submit the PPP Borrower Demographic Information Form. 

You must submit answers from PPP Loan Forgiveness Calculation Form and PPP Schedule A. The Schedule A Worksheet will help you complete the PPP Schedule A. To view these documents, click here > Latest Updates >  “Document your eligible payroll and non-payroll costs”.

The SBA has shared the following guidance on what Payroll documents will be needed to verify the eligible cash compensation and non-cash benefit payments from the Covered Period or the Alternative Payroll Covered Period consisting of each of the following:

• Bank account or third-party payroll service provider reports documenting the amount of cash compensation paid to employees.
• Tax forms (or equivalent third-party payroll service provider reports) for the periods that overlap with the Covered Period or the Alternative Payroll Covered Period:
  • Payroll tax filings reported, or that will be reported, to the IRS (typically, Form 941); and
  • State quarterly business and individual employee wage reporting and unemployment insurance tax filings reported, or that will be reported, to the relevant state.

Payment receipts, cancelled checks, or account statements documenting the amount of any employer contributions to employee health insurance and retirement plans that you included in the forgiveness amount.

It could take up to five months for us and the SBA to review most complete applications, actual times will vary. You won't have to start making payments until the SBA provides a decision on your request or remits the funds.

If you apply for Forgiveness within 10 months after the end of your Covered Period, you don’t have to make a payment until the SBA remits payment of a Forgiveness amount or doesn’t authorize Forgiveness. Of course, you won’t have to make any payments if the SBA authorizes your loan for full Forgiveness.

If you don’t submit a complete request for Forgiveness within 10 months after the end of the Covered Period, you will need to start making payments then.

You may be forgiven for all, some or none of your loan. You must repay the principal and interest amount of the unforgiven portion of your loan.

For loans made before June 5, the maturity is two years.  For loans funded on or after June 5, the maturity is five years. 

We will provide an update at a later date. 

The SBA, in its discretion, may undertake a review at any time including after Forgiveness has been approved.  A borrower must retain PPP documentation for six years after the date the loan is forgiven or repaid in full. 

Yes, as long as the SBA’s detailed appeal process – which was posted on August 11 -- is followed.  For details, visit Treasury.gov.