Q&A from CFOS2GO Webinar on Maximizing PPP Loan Forgiveness

By: Chris Burns, Jerry Johnson, Tong Qin

1. Does the non-payroll expenses include dues for web based programs that are used for the business? Such as electronic medical record programs or billing programs?

A: Current guidance does not include those types of expenses.

2. Does rent on storage units count in the non-payroll expenses?

A: That would fall under business rent obligations, which are eligible as long as the rental agreement was initiated < Feb 15

3. Is the SBA going extend the period to 3 months?

A: Congress passed a bill that extends the forgiveness period to 24 weeks. It will be put into law once signed by the President.

4. If we have part-time office help, only working about 15 hours per week can they be included, and if so how to calculate them?

A: From a headcount standpoint they would be counted as .375 FTE (full-time equivalent). Their gross wages and related eligible payroll costs would be included in the forgiveness calculation.

5. Can you go over the “utilities portion” of the forgiveness? Curious if we can include our gas for our trucks, health insurance employer costs, porta potty rental and or our answering service?

A: Employer health insurance costs are included in eligible payroll costs.  Utilities include electricity, gas, water, transportation, telephone, and internet access for which all services began before Feb 15, 2020.  There has been no guidance on what to include in transportation.  The answering service should fall under the telephone.  Porta-potty rental does not fall within an eligible category.

6. Please go over the FTE look back periods and the safe harbor dates and what’s best to use?

A: Baseline periods are either Jan 1, 2020 – Feb 29, 2020, or Feb 15, 2019 – June 30, 2019.  Borrower picks the most favorable (i.e. the lower average headcount).

7. We have 16 employees, but only 8 full-timers. The others are part-time and their hours vary a lot. 10 hours one week 5 another. How do we make sure we match the employees # at the end of the loan period?

A: Calculate the average FTE for the two baseline periods (see ques. #6), choose the lower average number and manage the time accordingly. However, if the President signs the new bill passed by Congress (Paycheck Protection Program Flexibility Act), the forgiveness period is extended to 24 weeks and you have until Dec 31, 2020 to restore your headcount to the baseline level to avoid reduction of forgiveness.

8. We have 3 weeks left of our 56 days to use our PPP funds (or as much as we can).  Our decision on what to do with staff will change significantly if the recent House bill passes.  What is it happens after our 56 days and our decisions to bring everyone back to work and full pay have been made?

A: Congress passed the bill on Jun 3, 2020, and it was signed by the President on June 5th. The forgiveness period has been extended to 24 weeks (168 days).  Unless your 56 days have already passed you should have time to make a more informed decision.

9. If we reduced pay rates should employees be filing for unemployment on the basis of reduced pay?  Seems like they shouldn’t as they then become entitled to the $600 / week Fed $ each week.

A: If an employee’s hours or wages have been reduced, they may be eligible to file for partial unemployment benefits.  Most of what you earn will be subtracted from the benefit amount.  The $600/week federal benefit expires as of Jul 31, 2020.

10. We have an employee who went part-time when the stay at home order began due to the childcare shut down. We have asked her to return full time so the headcount would not affect the PPP loan forgiveness but she states she unable to due to unavailable child care services. Will this affect the forgiveness, if so what can we do?

A: Guidance says that if you ask employees to come back to work and they refuse, you will not have that counted against forgiveness. In the case of part-time to full-time, there is no specific guidance, but the same logic should apply.

11. The calculation requires you to divide covered period wages (56 days) by a quarterly number (941 reports as of 03/31/2020) which contains 91 days.  If the value is .75 or more enter zero otherwise the forgiveness is reduced. It seems to me that no one will hit the 75% because 75% of 91 is 68.25 days of wages and the covered period is only 56 days of wages. Unless the employer has increased wages, it seems no one could hit the 75% and everyone would have a reduction to the forgiveness at least for those employers that have wages every day of the year.

A: This looks like instructions for Line 3 of PPP Schedule A. Calculation is based on average annual pay rate per person for the two timeframes.  The number of days in the two periods does not matter, you are prorating to an annual average amount and comparing to see what, if any, reduction there is in annual average pay rate.  If the difference is less than 25% (or forgiveness period wage is 75% or greater of baseline wage), then no penalty.

12. If we lay anyone off prior to spending the full balance of the loan, would I still meet the 100% forgiveness threshold?

A: It depends on how your average headcount for the forgiveness period compares to the baseline period (either Jan 1, 2020 – Feb 29, 2020, or Feb 15, 2019 – Jun 30, 2019).


Send your questions about PPP Loan Forgiveness to forgiveness@cfos2go.com.

Click here to watch the webinar.


Chris Burns co-leads the firm’s Start-ups, Rapid Growth & pre-IPO Practice. His hands-on financial leadership has helped deliver increased shareholder value, growth in cash flow and profits to startup and established market leaders. His strong foundation in large public technology and CPG companies, including Oracle and Clorox, combined with twenty years of experience in industry-leading global eCommerce, software and SaaS startups, developed Chris’ ability to bring hands-on financial leadership and partnership to CEO’s, boards, their investors and staff.

Jerry Johnson is an expert in Cleantech financial matters and has over 25 years of executive and CFO leadership experience guiding companies through financial and regulatory challenges.  He leads the Cleantech practice group at CFOs2GO and is a member of Financial Modeling and Analysis; Small Business; Startups, Rapid Growth Companies and pre-IPO; Financial Systems & Reporting practice teams.  Jerry has a BA in Physics and Economics from Washington University in St. Louis and a MBA from the University of Rochester.  He is a Certified Management Accountant.

Tong Qin co-leads the International Practice, bringing to clients a deep experience and knowledge of international business within and between the Asian basin and the United States. Tong helps small and big companies to design and implement financial controls needed for compliance with various government regulations, enabling management to focus on opportunities for growth instead of dealing with regulatory concerns.

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