If you are likely to apply or are going to apply for a paycheck protection program capital borrowing, now there is a process that has been introduced as a capital borrowing forgiveness application. Once the lender is ready to accept your capital borrowing forgiveness if only borrowers receive a PPP loan forgiveness on or before 5 June 2020. Then you must use 24 weeks. As the borrower who files for loan forgiveness can register their application before the end of the 24 weeks covered period. When many borrowers are still in the process of collecting data, medical and pension costs, rent, utilities, and mortgage loans so that they can file their PPP loan forgiveness application. Now there are many questions on how to calculate eligible payroll and non-payroll costs? But the main focus is the definition of average full-time equivalent (FTE) employees and how it is calculated.
Before filing the borrower needs to know which form to file. Form 3508 or Form 3508 EZ, these two forms will impact the computations of the borrower. This will need them to do for calculating capital borrowing forgiveness. If the borrower meets the need for filing Form 3508 then the borrower needs to meet certain criteria as provided by Form 3508 EZ instruction.
FTE: It is a small business administration (SBA) that defines a full-time equivalent employee as FTE. Where they work for 40 hours or more, on an average basis, and per week. If any employee is working less than 40 hours, then you can calculate it as a proportion of a single FTE employee. They do the FTE calculation period-wise. It is the covered period and reference period. The covered period is either 24 weeks (168 days) beginning on the paycheck protection program disbursement date or after the borrower receives the PPP capital borrowing at the end of 24-week. Whereas, reference period where the borrower can choose which reference period is most beneficial.
Some information from the PPP forgiveness calculation are:
When the SBA (small business administration) launched the paycheck protection program due to the coronavirus. It helps the employees to raise their funds. It also gives them a capital borrowing up to 100% forgivable. Only if the expenses are approved which includes payroll, rent, mortgage interest, and utilities. The government introduced the first PPP funds on April 3rd, 2020. Where all the small businesses will receive funds from early April to the end of the 8 weeks. It will follow the following capital borrowing origination and navigate you through forgiveness options and help you to fill out for PPP loan forgiveness application.
If your business received paycheck protection program funds, you will need to calculate the PPP loan forgiveness only if you are eligible. You also need to calculate Full-time employee (FTE) calculations.
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