Our Blog

Thought Leadership from the Leaders in Virtual Accounting and Bookkeeping Services

New Guidance Issued on PPP Loan Forgiveness


Great news! More guidance has been released this week regarding PPP Loan forgiveness.

The AICPA (Association of International Certified Professional Accountants) released a concise summary of the information:

  • Interim Final Rule on Additional Revisions to First Interim Final Rule (6/12/2020)
    • The original First Interim Final Rule (IFR) disqualified an applicant if an owner of 20% or more had been convicted of a felony within the last five years.
    • This revision reduced the requirement to one year for felonies that do not include fraud, bribery, embezzlement, or a false statement in a loan application or an application for federal financial assistance.
    • Interim Final Rule on Revisions to the Third and Sixth Interim Final Rules (6/17/2020)
    • Updated to reflect the PPP Flexibility Act
      • Covered period updated to 24 weeks
      • 60% to be spent on payroll costs
    • Eligible payroll costs per employee
      • Capped at $46,154 for 24-week covered period borrowers
      • Remains capped at $15,385 for 8-week covered period borrowers
    • Owner Compensation Replacement
      • Capped at the lesser of $20,833 or 2.5 months’ worth of 2019 net profit for 24-week covered period borrowers
        • $100k / 12 months * 2.5 months = $20,833
      • Remains capped at $15,385 for 8-week covered period borrowers
      • Note: Instructions to loan forgiveness application indicate all owners are capped at these amounts (including S Corp and C Corp owners)
      • An EZ Loan Forgiveness Application is available
    • Applies to borrowers that
      • Are self-employed and have no employees; OR
      • Did not reduce the salaries or wages of employees by more than 25%, and did not reduce the number or hours of employees; OR
      • Experienced reduction in business activity as a result of health directives related to COVID-19, and did not reduce the salaries or wages of employees by more than 25%.
    • A simplified one-page form plus certifications and representations
      • Requires fewer calculations
      • Documentation still required to be submitted / maintained including full time employees at 1/1/2020 and end of covered period
      • The full Loan Forgiveness Application has been revised
    • A borrower can choose an 8 or 24 week covered period if loan funds were received prior to June 5
    • New certifications regarding FTE reduction safe harbor related to operating restrictions
    • Non-cash compensation costs clarified to “paid or incurred”
    • FTE and salary/hourly wage calculation for reduction are basically the same
    • Health insurance for S Corp owners, self-employed, and general partners is not allowed
    • Retirement contributions for S Corp owners is allowed. It is not allowed for self-employed and general partners.

Please reach out to us if you have any questions on how to maximize forgiveness. We can help determine whether to elect for an 8 week or 24 week covered period. We are also available to track expenses and complete the Forgiveness Application.


exit strategy alignment
New Call-to-action
New Call-to-action
New Call-to-action

Subscribe to Email Updates


View All

10 Signs Your Business Is Ready For Outsourced Accounting Services