Home COVID-19: Resources and Discussions for Small Businesses
Announcement:: Please see our new COVID-19 category where small businesses can engage with other business owners and experts to share best practices, information and other resources that will help us all get through this crisis.

Can employees claim unemployment before PPP funds get awarded?

Can a business furlough or lay off employees while awaiting PPP acceptance? They would have to rehire them as of loan origination or as of June 30?

Tagged:

Answers

  • Brian_SBMBrian_SBM Vice President, Entrepreneurship Administrator admin

    @LauraG this is a key question and one on which we are still awaiting final guidance on how exactly the forgiveness would be calculated. Many business owners are in your position, if they have not furloughed or laid off staff already. You do have 8 weeks from loan origination date to spend the proceeds on allowable amounts for them to be forgiven. Anything else would convert to a 1%, 2 year loan. You may want to take a loan smaller than the max allowable amount, start rehiring as soon as you are able, and/or accept that some portion will convert to a loan. We hope to provide further clarity on this exact topic.

  • rosenzweig70rosenzweig70 Managing Partner Member ✭✭

    Has anything more been learned on this topic? This is really a pivotal concern as we consider using PPP money in the near future.

  • Brian_SBMBrian_SBM Vice President, Entrepreneurship Administrator admin

    @rosenzweig70 The latest push from the SBA is that the idea is that businesses would begin to rehire as soon as they receive PPP funding. To be eligible for forgiveness, the funds must be expended for eligible uses over 8 weeks starting at loan origination date.

  • rosenzweig70rosenzweig70 Managing Partner Member ✭✭

    Thanks Brian. So, if for example I plan to hire back employees for May 1 using PPP money, and indicate to them that they must accurately report that change of status to UI administrator, then I should be within guidelines to pursue forgiveness for that pay that's beginning May 1. Would you say that's accurate?

  • Brian_SBMBrian_SBM Vice President, Entrepreneurship Administrator admin

    @rosenzweig70 That sounds correct, yes. I'm sure state UI administrator would have other ways of knowing too that they are back on payroll but they should definitely report it.

  • EDoonan1961EDoonan1961 owner Member

    can the ppp be used for back pay to those were laid off. and as i understand when i begin to hire people back thats when i start using ppp

  • Brian_SBMBrian_SBM Vice President, Entrepreneurship Administrator admin

    @EDoonan1961 I don't believe backdated payments would be eligible (and also might jeopardize the employees' UI). Eligible costs for forgiveness are for those payroll and other eligible costs paid over 8 weeks of originating the PPP loan. So you are advised to try to bring people back as soon as possible. The SBA has issued guidance if the employee refuses to come back (see question 40 here: https://home.treasury.gov/system/files/136/Paycheck-Protection-Program-Frequently-Asked-Questions.pdf). One of the challenges is the general lack of guidance from SBA on the forgiveness process.

Sign In or Register to comment.