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Is payroll level for PPP counted by head count or total dollars?

If we get a PPP loan, will the amount forgiven increase if we are paying staff more to work during the pandemic? If we had 10 employees prior, and only 5 presently, can we pay them double and have that amount forgiven? If we were to pay the same in wages would we be penalized by having less of the loan forgiven?

Answers

  • Brian_SBMBrian_SBM Vice President, Entrepreneurship Administrator admin

    @alexk According to the legislation and rules, the forgiveness can be reduced if headcount decreases. Definitely discuss your specific situation with your PPP lender.

  • rosenzweig70rosenzweig70 Managing Partner Member ✭✭

    @Brian_SBM said:
    @alexk According to the legislation and rules, the forgiveness can be reduced if headcount decreases. Definitely discuss your specific situation with your PPP lender.

    But it's headcount of full time employees, correct? A change in part-time employee headcount doesn't seem to have any bearing on forgiveness. Please correct me if that's wrong.

  • Brian_SBMBrian_SBM Vice President, Entrepreneurship Administrator admin

    @rosenzweig70 Again, full guidance on forgiveness is still forthcoming, but parttime and fulltime are included in the loan and forgiveness calculations. You should strive to maintain full headcount for both over 8 weeks with the PPP funding, as that is what the funding is intended for.

  • rosenzweig70rosenzweig70 Managing Partner Member ✭✭

    @Brian_SBM This is a fairly significant question for us, since we're about half full time and half part time. So I'm eager to find clarity. Could I ask what resource you're drawing from when you say that part time employees are included in forgiveness calculations?

    Both the U.S. Treasury documentation (available here, roughly line 8) and the Venturize page (available here, first bullet under 'How Much of the Loan Can Be Forgiven) state that forgiveness relates to full-time headcount.

    Thank you @Brian_SBM!!

  • Brian_SBMBrian_SBM Vice President, Entrepreneurship Administrator admin
    edited April 2020

    @rosenzweig70 Right under that Treasury rule (where we go the info for Venturize), it also states: "Your loan forgiveness will also be reduced if you decrease salaries and wages by more than 25% for any employee that made less than $100,000 annualized in 2019."

    Let's say that you qualify for a $100,000 PPP loan based on 2019 FT and PT wages. If you've let all your PT staff go, and only have $50,000 in FT payroll costs over the next 8 weeks of getting a loan, then your forgiveness likely would be reduced, since you are not using 75% of the PPP proceeds on payroll. I do not believe that paying your FT employees more than what they were making to make up the difference would be advisable and could make you ineligible for forgiveness. But again, we don't have full clarity, and I couldn't say when more is coming. The SBA person I spoke today also couldn't say. I would advise that you use the PPP funding for full payroll costs, including bringing back currently furloughed part-time workers.

  • rosenzweig70rosenzweig70 Managing Partner Member ✭✭

    Thanks @Brian_SBM I see it now... you're absolutely right. You know, I finally decided to read the actual legislation. The reality is that the headcount focuses on full-time equivalents. Which is not the same as full-time employees. That US Treasury document which references full-time employees is unfortunately misleading.

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