Answers to Questions

Here are answers to some of questions we've been asked.  It's a random list from the latest guidance, as we understand them today.

Full Time Equivalent Employee Calculations

When calculating your full time equivalent employees (FTEE's), use 40 hour weeks for the full time amount.  There has been confusion about how to equate part time employees with full time employees, and some have suggested considering 30 hours as full time.  Although 30 hours is the standard in the health insurance rules, for the PPP loans, 40 hours is the full time amount.

If an employee works less than 40 hours per week, they can simply be considered to be 0.5 of a full time employee.  If they work overtime beyond 40 hours per week, they are still 1.0 full time employee.  This approach can be used to simplify the conversion math.

Advance Forgiveness - Meaning the Advance Has to Be Paid Back

If you received the EIDL assistance grant of $1,000 per employee, it will be forgiven, as long as you do not also get a PPP loan.  If you also get a PPP loan and spend the PPP money appropriately, all of the loan will be forgiven with the exception of the earlier advance amount.  This is tricky and has not been well publicized.

For example, you received a $7,000 advance early, and then also got a $50,000 PPP loan.  You spent the $50,000 on payroll and rent, following the expense rules to the letter.  The $7,000 advance will be deducted from the $50,000 loan forgiveness.  So, $43,000 of the loan will be forgiven.  The $7,000 advance will be converted to a 2 year loan at 1% at the end of the forgiveness period.  Essentially, you have to pay the advance back!

Resignations of Staff During the Base Period or Pandemic

If a staff member voluntarily resigned before the pandemic hit, but during the base period months, be sure to get their resignation in writing. If you offer a job to someone and they turn it down, also keep their response in writing.  This indicates that their unemployment is not pandemic-associated and may be used to help your head count calculations. There isn't much guidance about this yet.

Bonuses, Pay Increases and Pay Decreases

You can give pay increases to your staff for additional work, but only up to a maximum of 25% of their salary.  Correspondingly, you cannot reduce salaries by more than 25%.

Tips received by employees are included as part of eligible wages.  Normal vacation pay is also included.  Expense reimbursements to employees, such as amounts paid for professional dues, mileage, or meals are not included in wages for the PPP calculation.

PPP and Unemployment

If you are self-employed, you can file for unemployment benefits or you can apply for the PPP loan.  You cannot get both.  The point of the PPP loans is to bring people back to work and off of the unemployment roles.