Reducing Employee Headcount – If the average number of a borrower’s full-time equivalent (FTE) employees during the eight-week period following origination is reduced compared to a pre-crisis comparison period, then the forgivable amount of your loan will be proportionately reduced. However, if a previously laid-off employee declines a rehire offer from the borrower, provided that certain documentation procedures are followed, that employee will not count against the borrower for forgiveness reduction purposes.
FTE Pre-Crisis Comparison Periods (at borrower’s option):
February 15, 2019 – June 30, 2019 OR
January 1, 2020 – February 29, 2020
Exemption for Rehiring – Forgiveness amount will not be reduced if you re-hire to pre-crisis levels by June 30, 2020. Specifically, if you reduced FTEs from February 15 – April 27, 2020, forgiveness can be restored if FTE restored to pre-crisis levels by June 30, 2020.
Reducing Salaries – If a borrower cuts employee salaries (who make $100,000 per year or less) by more than 25%, the dollar amount of the reduction in excess of 25% reduces the amount of your loan that is forgivable.
Exemption for Restored Salaries – Forgiveness amount will not be reduced if you restore salaries to pre-crisis levels by June 30, 2020.
Using Less Than 75% of PPP Loan Proceeds for Payroll Costs – If 75% of loan proceeds are NOT used for payroll costs, then the dollar amount of the difference is not eligible for forgiveness.
Not Using 100% of the Proceeds Within 8-Week Period – Any amount not used within the eight-week period following origination is not forgivable and must be repaid.