On Friday night, Treasury and the SBA released the application for loan forgiveness, two supporting schedules, and instructions, eleven pages in all.  In addition, the SBA plans additional guidance and regulations soon.

The Good News

The SBA said its form and instructions are designed to reduce compliance burdens and simplify the process for borrowers.  Based on our initial review of the form and instructions, we agree and applaud the SBA.  We also feel that the guidance provided continues the more business friendly approach exhibited in FAQ 46.  FAQ 46, among other things, created a safe harbor for borrowers with loans under $2 million.

More Good News

The limitation for a reduction in headcount will be applied after the limitation for a reduction in pay rates.  This choice by the SBA gives the best result for all borrowers and, notably, is the opposite of how it appears in the Act.

A Little Bad News

Full time equivalents (FTEs) will be based on 40 hours per week, not 30.  An individual may count for no more than 1.0 FTE.  This will hurt those businesses which decided to retain employees but with a reduced work schedule.  This seems to be one of the few items of bad news.

Oh, What a Surprise.  YES!

In our opinion, the best news is that the SBA has adopted a very inclusive view of “paid and incurred.”  We understood Congress’s intent to include in payroll costs the sum of both amounts paid and amounts incurred during the eight-week period.  We are pleasantly surprised that the SBA agrees.

While we are eagerly awaiting the promised SBA regulations, we think it’s time for our next webinar.  Plan on one or two hours of details, details, and more details.  An invitation for Thursday morning will be coming soon.