- Gather detailed payroll records for the past 12 months. Calculate the average monthly payroll costs for that period and multiply by 2.5x to determine the approximate maximum PPP loan amount. If you want to attempt to have the full principal balance of the loan forgiven, make sure to subtract the portion of payroll cost that exceed $100,000 on a prorated basis over the period for employees that make over $100,000 annually because that will count toward the payroll cost for the purposes of determining loan forgiveness.
- Determine how many full-time equivalent employees were on your payroll from 2/15/2019 to 6/30/2019 and all your payroll costs (see definition above) during that period. The average number of FTE employees is determined by calculating the average number of FTE employees for each pay period falling within a month. It appears that in order to maximize loan forgiveness, after you obtain the loan clients will need to keep FTE employee numbers equal to or above 2/15/2019 to 6/30/2019 numbers. Additionally payroll costs cannot decrease by more than 25% compared to 2/15/2019 to 6/30/2019. This remains a bit confusing but more guidance should be available soon.
- Create a budget for all expenses that commenced 2/15/2020 and run until 6/30/2020. Be as detailed as possible and include all operating costs (Payroll, Insurance, Utilities, Rent/Mortgage Interest, etc). Consideration should be given to the amount of your payroll expense that is not eligible for forgiveness. Any amount borrowed in excess of the amount eligible for forgiveness will need to be repaid.
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