On April 24, 2020, guidance was issued on How to Calculate Loan Amounts
The U. S. Small Business Administration will resume accepting PPP loan applications on Monday, April 27 at 10:30 AM EDT from approved lenders on behalf of any eligible borrower. On April 24, 2020, guidance was issued on How to Calculate Loan Amounts. This guidance provides the exact calculation that should be utilized by:
On April 26, 2020, the U. S. Small Business Administration provided an update to the PPP Frequently Asked Questions:
Question: To determine borrower eligibility under the 500-employee or other applicable threshold established by the CARES Act, must a borrower count all employees or only full-time equivalent employees?
Answer: For purposes of loan eligibility, the CARES Act defines the term employee to include “individuals employed on a full-time, part-time, or other basis.” A borrower must therefore calculate the total number of employees, including part-time employees, when determining their employee headcount for purposes of the eligibility threshold. For example, if a borrower has 200 full-time employees and 50 part-time employees each working 10 hours per week, the borrower has a total of 250 employees. By contrast, for purposes of loan forgiveness, the CARES Act uses the standard of “full-time equivalent employees” to determine the extent to which the loan forgiveness amount will be reduced in the event of workforce reductions.
Most eligible applicants have already applied for the PPP loan and are hopefully in line waiting for final approvals. However, for those applicants who are still applying for PPP Loan, this is necessary guidance to ensure applicants are calculating payroll cost and the number of employees accurately.
We will continue to keep you apprised as additional information and guidance is provided. If you have specific questions, please reach out to your blum partner or contact us here.
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