What to do now that you have your PPP funds?
  • Record the loan to GL 2344—SBA PPP Loan;
    1. Make sure your weekly transmittal is set to the current week
    2. Add a miscellaneous deposit for the total amount of the PPP deposit to GL 2344. Note: If for some reason GL 2344 isn’t available, please call RSI and we’ll add it.
  • Pay employees through existing job codes if the business is up and running, even if only doing take-out and/or delivery. Create new job codes for employees that are working in a newly created position; g. Sanitation or Deep Cleaning job codes for employees working to ready the restaurant for opening.  Use earning codes for employees being paid lump sum wages, like vacation or paid time off (plans not required by law).
What are qualifying expenses for utilities?
  • Electricity
  • Gas
  • Water
  • Telephone
  • Internet
What are qualifying payroll expenses (costs)?
  • Salary, wages, commissions, and tips (maximum amount of salary, wages, commissions and tips taken into consideration for payroll costs is $100,000/per year for each employee);
  • Employee benefits including, but not limited to, expenses paid for severance, vacation and insurance premiums;
  • State and local taxes assessed on compensation
What documentation will be needed when loan forgiveness is requested from your lender?
  • Documentation verifying the number of full-time equivalent employees on payroll and pay rates including:
    1. Payroll tax filings reported to the Internal Revenue Service; and
    2. State income, payroll, and unemployment insurance filings
  • Documentation, including cancelled checks, payment receipts, transcripts of accounts, or other documents verifying payments on covered mortgage obligations, payments on covered lease obligations, and covered utility payments;
Where can I get a report with full-time equivalent employees?

Under reports in RSI-Shifts there is an FTE calculator, which is used for purposes of calculating FTEs under the ACA.

Where can I get a report with a head count of employees?

The PPP report can be requested for any time frame and will return the number of employees that received a check each month.

Will RSI supply my tax reports (941, SUI, state/local) like they did when I applied for my PPP loan?

Yes, RSI will provide the same level of service and supply the necessary reports to apply for loan forgiveness under the CARES Act.

What time frame will be used to measure how the PPP funds are used?

The 8-week time frame begins the day your funds are received.

What time frame will be used to measure our staff levels?

You have until June 30, 2020 to restore staffing levels to previous levels.

What if I cannot get my staffing levels up to previous levels?

Your PPP forgiveness amount will be reduced proportionately and the amount not forgiven will need to be repaid.

Were FTE calculations required when the PPP loan was originally requested?

No.  According to the SBA and US Treasury guidance, a headcount of all employees was required to determine if a business was under the threshold of 500 employees and eligible for a PPP loan.  By contrast, the PPP forgiveness process uses the standard of “full-time equivalent” (FTE) employees.

What date ranges does the PPP forgiveness process require employers to calculate FTEs per payroll in order to determine if there was a workforce reduction according the CARES Act?

According to the CARES Act lenders will request FTE calculations per payroll for three different date ranges to determine if there was a workforce reduction during the 8-week period after PPP funds were received; the three date ranges are listed here:

  1. The average number of FTEs per payroll employed during the 8-week period starting with the day PPP funds are received
  2. Standard period #1: average number of FTEs per payroll employed during the period beginning on February 15, 2019 and ending on June 30, 2019
  3. Standard period #2: average number of FTEs per payroll employed during the period beginning on January 1, 2020 and ending on February 29, 2020
How is a reduction in workforce calculated?

Example: if the average # of FTEs per payroll was 14 during the 8-week period after the PPP funds were received; 28 for 1st standard period; and 19 for the 2nd standard period—the calculations would be as follows and the period that provides the best results should be used.

  • Calculation based on standard period #1à 14/28 = .5, which means there are still 50% of employees still employed and a 50% reduction to the workforce
  • Calculation based on standard period #2à 14/19 = .7368, which means there are still almost 74% of employees still employed and a 26.32% reduction to the workforce

Standard period #2, which consists of January 1, 2020 through February 29, 2020, would be used by the lender to calculate a reduction in workforce because it provides the best result.  The reduction in workforce would reduce the amount of PPP loan that is forgiven.  However, the reduction in workforce can be overridden and ignored in the calculation of loan forgiveness if FTE levels are restored by June 30, 2020.

When do I need to have FTE levels restored by in order to override any reduction in workforce in the PPP forgiveness process?

If there is a reduction in number of FTEs during the period beginning on February 15, 2020 and ending March 26, 2020 the reduction will be overridden, and ignored in the calculation of loan forgiveness, if by June 30, 2020, the reduction is eliminated.

Please note that in the process of loan forgiveness the calculation to override a reduction in workforce is completely separate from calculation to determine if there is a reduction in the workforce and uses different comparison dates.

What time period is the FTE count on June 30, 2020 compared to in order to determine if a reduction in workforce was eliminated?

When there is a reduction in workforce during the period beginning on February 15, 2020 and ending on April 26, 2020 the date used to calculate FTEs as a comparison to the FTE count on June 30, 2020 is February 15, 2020.

Will I need FTE count on February 15, 2020?

Yes.  Use the payroll period that encompasses February 15, 2020 for the FTE count as of that date.

Will I need an FTE count by payroll for the date range of February 15, 2020 – April 26, 2020?

Yes.

How do I obtain FTE calculations by payroll over these different date ranges?

RSI is in the process of creating a PPP FTE report that will calculate FTEs by payroll.  RSI will provide an alert when the PPP FTE report is available.

How does the PPP FTE report calculate FTEs?

An FTE is based on 40 hours per week.  An employee that works 40 or more hours per weekly payroll is considered a full-time employee.  All hours from employees that work less than 40 hours per weekly payroll are added up and divided by 40 to determine FTE employees.  The full-time employee count is added to the FTE count to get a total count of full-time employees and FTE employees.

How will the FTE data be reported?

The PPP FTE report will calculate FTEs per payroll, display the results by check date, and provide the average per payroll over the date range of the report.

When will the PPP FTE report be available?

Our IT team is working tirelessly to get this done so we are planning for a release date of May 20, 2020.

Does the 8-week covered period used to measure forgivable costs begin the day the PPP funds were received?

Yes, but there is an exception for measuring payroll related costs.  The “Alternative Payroll Covered Period” may be elected on your PPP Loan Forgiveness Application and begins with the first day of the very next pay period beginning immediately after the borrower received its PPP loan proceeds.

Does the “Alternative Payroll Covered Period” apply to non-payroll costs?

No, only payroll related items will be allowed to use the Alternative Payroll Covered Period, while payments on other expenses will continue to refer to the 8-week covered period beginning on the date the loan funds are deposited into the borrower’s account.

How are payrolls measured for forgiveness if a check date falls within the covered period but the wages were not earned in the covered period?

Eligible payroll costs paid during the covered period regardless of when incurred are eligible for forgiveness.

How are payroll costs measured for forgiveness if a check date falls outside of the covered period but all wages were earned during the covered period?

Eligible payroll costs incurred during the covered period so long as they are paid by the regularly scheduled payroll check date are eligible for forgiveness.

How much salary will qualify for forgiveness for owner-employees?

Owner-employee’s salary included in the forgiveness calculation cannot exceed eight weeks’ worth of 2019 compensation for any owner-employee, capped at $15,385 per individual over the covered period.

Why is an owner-employee’s salary based on 2019 salary levels?

This would serve to limit the ability of a corporation to attempt to cram in a bonus to get an owner-employee who had less than $100,000 in 2019 cash compensation up to the $15,385 maximum amount per individual for the forgiveness calculation.

How are eligible non-payroll costs measured for forgiveness if the expense was paid during the covered period but the entire expense was not incurred during the covered period?

Non-payroll costs paid during the covered period will be eligible for forgiveness regardless of the fact that the entire expense was not incurred during the covered period.  Eligible non-payroll costs cannot exceed 25% of the total forgiveness amount.

How are eligible non-payroll costs measured for forgiveness if the expense was incurred during the covered period but was not paid during the covered period?

As long as the non-payroll cost is paid before the next regular billing due date any eligible non-payroll costs incurred during the covered period are eligible for forgiveness.  You may be required to prorate the costs incurred in, but paid after, the covered period.  Note that it will be important to insure that these “end of period” bills are paid timely—per the instructions, if the bill is not paid on time these costs would not count towards forgiveness.  Eligible non-payroll costs cannot exceed 25% of the total forgiveness amount.

Are owners included in the calculation of average FTE?

No, owner’s hours are not included in Table 1 or Table 2 on the PPP Loan Forgiveness Application Schedule A, which means they will not enter into the calculation of FTEs or reduction in FTEs.

How many hours defines average FTE for purposes of calculating PPP loan forgiveness?

40 hours per week is used as the full time base.  It was originally thought the Treasury and SBA would use 30 hours per week like the ACA but the instructions for the PPP Loan Forgiveness Application indicate otherwise.

If an employee refuses a qualified job offer to return to work and was employed prior to the covered period but was laid off, will that count as a reduction in salary/wage and reduce forgiveness?

No, table 1 on the PPP Loan Forgiveness Application does not include any employee that did not work for the employer during the covered period.  This is an employer friendly view of how the salary/wage reduction rules work.

If an employee refuses a qualified job offer to return to work but was employed prior to the covered period and was laid off, will that count as a reduction in total FTE and reduce forgiveness?

No, an employee that refused a qualified job offer does not reduce forgiveness as long as a replacement was not rehired.

What is a “qualified job offer”?

Employment for the same hours at the same rate.

Will an employee that was terminated for cause during the covered period count as a reduction in total FTE and reduce forgiveness?

No, an employee that is terminated for cause does not reduce forgiveness as long as a replacement was not rehired.  The treatment is the same for an employee that voluntarily resigned, or voluntarily requested and received a reduction of their hours.

Will documentation supporting the calculations on PPP Schedule A Worksheet need to be provided to the lender with the PPP Loan Forgiveness Application?

No, the following list of supporting documentation must be kept for 6 years from the date the loan was forgiven or paid in full and produce the documents if requested by the SBA:

  • Documentation supporting the listing of each individual employee in PPP Schedule A Worksheet Table 1, including the “Salary/Hourly Wage Reduction” calculation, if necessary.
  • 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.
  • Documentation regarding any employee job offers and refusals, firings for cause, voluntary resignations, and written requests by any employee for reductions in work schedule.
  • Documentation supporting the PPP Schedule A Worksheet “FTE Reduction Safe Harbor.”

What to do now that you have your PPP funds?

  • Record the loan to GL 2344—SBA PPP Loan;
    1. Make sure your weekly transmittal is set to the current week
    2. Add a miscellaneous deposit for the total amount of the PPP deposit to GL 2344. Note: If for some reason GL 2344 isn’t available, please call RSI and we’ll add it.
  • Pay employees through existing job codes if the business is up and running, even if only doing take-out and/or delivery. Create new job codes for employees that are working in a newly created position; g. Sanitation or Deep Cleaning job codes for employees working to ready the restaurant for opening.  Use earning codes for employees being paid lump sum wages, like vacation or paid time off (plans not required by law).

What are qualifying expenses for utilities?

  • Electricity
  • Gas
  • Water
  • Telephone
  • Internet

What are qualifying payroll expenses (costs)?

  • Salary, wages, commissions, and tips (maximum amount of salary, wages, commissions and tips taken into consideration for payroll costs is $100,000/per year for each employee);
  • Employee benefits including, but not limited to, expenses paid for severance, vacation and insurance premiums;
  • State and local taxes assessed on compensation

What documentation will be needed when loan forgiveness is requested from your lender?

  • Documentation verifying the number of full-time equivalent employees on payroll and pay rates including:
    1. Payroll tax filings reported to the Internal Revenue Service; and
    2. State income, payroll, and unemployment insurance filings
  • Documentation, including cancelled checks, payment receipts, transcripts of accounts, or other documents verifying payments on covered mortgage obligations, payments on covered lease obligations, and covered utility payments;

Where can I get a report with full-time equivalent employees?

Under reports in RSI-Shifts there is an FTE calculator, which is used for purposes of calculating FTEs under the ACA.

Where can I get a report with a head count of employees?

The PPP report can be requested for any time frame and will return the number of employees that received a check each month.

Will RSI supply my tax reports (941, SUI, state/local) like they did when I applied for my PPP loan?

Yes, RSI will provide the same level of service and supply the necessary reports to apply for loan forgiveness under the CARES Act.

What time frame will be used to measure how the PPP funds are used?

The 8-week time frame begins the day your funds are received.

What time frame will be used to measure our staff levels?

You have until June 30, 2020 to restore staffing levels to previous levels.

What if I cannot get my staffing levels up to previous levels?

Your PPP forgiveness amount will be reduced proportionately and the amount not forgiven will need to be repaid.

Were FTE calculations required when the PPP loan was originally requested?

No.  According to the SBA and US Treasury guidance, a headcount of all employees was required to determine if a business was under the threshold of 500 employees and eligible for a PPP loan.  By contrast, the PPP forgiveness process uses the standard of “full-time equivalent” (FTE) employees.

What date ranges does the PPP forgiveness process require employers to calculate FTEs per payroll in order to determine if there was a workforce reduction according the CARES Act?

According to the CARES Act lenders will request FTE calculations per payroll for three different date ranges to determine if there was a workforce reduction during the 8-week period after PPP funds were received; the three date ranges are listed here:

  1. The average number of FTEs per payroll employed during the 8-week period starting with the day PPP funds are received
  2. Standard period #1: average number of FTEs per payroll employed during the period beginning on February 15, 2019 and ending on June 30, 2019
  3. Standard period #2: average number of FTEs per payroll employed during the period beginning on January 1, 2020 and ending on February 29, 2020

How is a reduction in workforce calculated?

Example: if the average # of FTEs per payroll was 14 during the 8-week period after the PPP funds were received; 28 for 1st standard period; and 19 for the 2nd standard period—the calculations would be as follows and the period that provides the best results should be used.

  • Calculation based on standard period #1à 14/28 = .5, which means there are still 50% of employees still employed and a 50% reduction to the workforce
  • Calculation based on standard period #2à 14/19 = .7368, which means there are still almost 74% of employees still employed and a 26.32% reduction to the workforce

Standard period #2, which consists of January 1, 2020 through February 29, 2020, would be used by the lender to calculate a reduction in workforce because it provides the best result.  The reduction in workforce would reduce the amount of PPP loan that is forgiven.  However, the reduction in workforce can be overridden and ignored in the calculation of loan forgiveness if FTE levels are restored by June 30, 2020.

When do I need to have FTE levels restored by in order to override any reduction in workforce in the PPP forgiveness process?

If there is a reduction in number of FTEs during the period beginning on February 15, 2020 and ending March 26, 2020 the reduction will be overridden, and ignored in the calculation of loan forgiveness, if by June 30, 2020, the reduction is eliminated.

Please note that in the process of loan forgiveness the calculation to override a reduction in workforce is completely separate from calculation to determine if there is a reduction in the workforce and uses different comparison dates.

Will I need FTE count on June 30, 2020?

Yes.  Use the payroll period that encompasses June 30, 200 for the FTE count as of that date.

What time period is the FTE count on June 30, 2020 compared to in order to determine if a reduction in workforce was eliminated?

When there is a reduction in workforce during the period beginning on February 15, 2020 and ending on March 26, 2020 the date used to calculate FTEs as a comparison to the FTE count on June 30, 2020 is February 15, 2020.

Will I need FTE count on February 15, 2020?

Yes.  Use the payroll period that encompasses February 15, 2020 for the FTE count as of that date.

Will I need an FTE count by payroll for the date range of February 15, 2020 – March 26, 2020?

Yes.

How do I obtain FTE calculations by payroll over these different date ranges?

RSI is in the process of creating a PPP FTE report that will calculate FTEs by payroll.  RSI will provide an alert when the PPP FTE report is available.

How does the PPP FTE report calculate FTEs?

An FTE is based on 40 hours per week.  An employee that works 40 or more hours per weekly payroll is considered a full-time employee.  All hours from employees that work less than 40 hours per weekly payroll are added up and divided by 40 to determine FTE employees.  The full-time employee count is added to the FTE count to get a total count of full-time employees and FTE employees.

How will the FTE data be reported?

The PPP FTE report will calculate FTEs per payroll, display the results by check date, and provide the average per payroll over the date range of the report.

When will the PPP FTE report be available?

Our IT team is working tirelessly to get this done so we are planning for a release date of May 20, 2020.

Does the 8-week covered period used to measure forgivable costs begin the day the PPP funds were received?

Yes, but there is an exception for measuring payroll related costs.  The “Alternative Payroll Covered Period” may be elected on your PPP Loan Forgiveness Application and begins with the first day of the very next pay period beginning immediately after the borrower received its PPP loan proceeds.

Does the “Alternative Payroll Covered Period” apply to non-payroll costs?

No, only payroll related items will be allowed to use the Alternative Payroll Covered Period, while payments on other expenses will continue to refer to the 8-week covered period beginning on the date the loan funds are deposited into the borrower’s account.

How are payrolls measured for forgiveness if a check date falls within the covered period but the wages were not earned in the covered period?

Eligible payroll costs paid during the covered period regardless of when incurred are eligible for forgiveness.

How are payrolls measured for forgiveness if a check date falls within the covered period but the wages were not earned in the covered period?

Eligible payroll costs paid during the covered period regardless of when incurred are eligible for forgiveness.

How are payroll costs measured for forgiveness if a check date falls outside of the covered period but all wages were earned during the covered period?

Eligible payroll costs incurred during the covered period so long as they are paid by the regular scheduled payroll check date are eligible for forgiveness.

How much salary will qualify for forgiveness for owner-employees?

Owner-employee’s salary included in the forgiveness calculation cannot exceed eight weeks’ worth of 2019 compensation for any owner-employee, capped at $15,385 per individual over the covered period.

Why is an owner-employee’s salary based on 2019 salary levels?

This would serve to limit the ability of a corporation to attempt to cram in a bonus to get an owner-employee who had less than $100,000 in 2019 cash compensation up to the $15,385 maximum amount per individual for the forgiveness calculation.

How are eligible non-payroll costs measured for forgiveness if the expense was paid during the covered period but the entire expense was not incurred during the covered period?

Non-payroll costs paid during the covered period will be eligible for forgiveness regardless of the fact that the entire expense was not incurred during the covered period.  Eligible non-payroll costs cannot exceed 25% of the total forgiveness amount.

How are eligible non-payroll costs measured for forgiveness if the expense was incurred during the covered period but was not paid during the covered period?

As long as the non-payroll cost is paid before the next regular billing due date any eligible non-payroll costs incurred during the covered period are eligible for forgiveness.  You may be required to prorate the costs incurred in, but paid after, the covered period.  Note that it will be important to insure that these “end of period” bills are paid timely—per the instructions, if the bill is not paid on time these costs would not count towards forgiveness.  Eligible non-payroll costs cannot exceed 25% of the total forgiveness amount.

Are owners included in the calculation of average FTE?

No, owner’s hours are not included in Table 1 or Table 2 on the PPP Loan Forgiveness Application Schedule A, which means they will not enter into the calculation of FTEs or reduction in FTEs.

Are owners included in the calculation of total salary/wage reduction?

No, owner’s wages are not included in Table 1 or Table 2 on the PPP Loan Forgiveness Application Schedule A, which means they will not enter into the calculation of total salary/wage reduction.

How many hours defines average FTE for purposes of calculating PPP loan forgiveness?

40 hours per week is used as the full time base.  It was originally thought the Treasury and SBA would use 30 hours per week like the ACA but the instructions for the PPP Loan Forgiveness Application indicate otherwise.

If an employee refuses a qualified job offer to return to work and was employed prior to the covered period but was laid off, will that count as a reduction in salary/wage and reduce forgiveness?

No, table 1 on the PPP Loan Forgiveness Application does not include any employee that did not work for the employer during the covered period.  This is an employer friendly view of how the salary/wage reduction rules work.

If an employee refuses a qualified job offer to return to work but was employed prior to the covered period and was laid off, will that count as a reduction in total FTE and reduce forgiveness?

No, an employee that refused a qualified job offer does not reduce forgiveness as long as a replacement was not rehired.

What is a “qualified job offer”?

Employment for the same hours at the same rate.

Will an employee that was terminated for cause during the covered period count as a reduction in total FTE and reduce forgiveness?

No, an employee that is terminated for cause does not reduce forgiveness as long as a replacement was not rehired.  The treatment is the same for an employee that voluntarily resigned, or voluntarily requested and received a reduction of their hours.

Will documentation supporting the calculations on PPP Schedule A Worksheet need to be provided to the lender with the PPP Loan Forgiveness Application?

No, the following list of supporting documentation must be kept for 6 years from the date the loan was forgiven or paid in full and produce the documents if requested by the SBA:

  • Documentation supporting the listing of each individual employee in PPP Schedule A Worksheet Table 1, including the “Salary/Hourly Wage Reduction” calculation, if necessary.
  • 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.
  • Documentation regarding any employee job offers and refusals, firings for cause, voluntary resignations, and written requests by any employee for reductions in work schedule.
  • Documentation supporting the PPP Schedule A Worksheet “FTE Reduction Safe Harbor.”