July 5, 2020

Volume X, Number 187

July 03, 2020

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July 02, 2020

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SBA Releases Loan Forgiveness and Other Guidance

Please note that this alert updates prior publications made by our firm pertaining to the subject matter discussed below.

The SBA recently released a form of application for borrowers seeking loan forgiveness under the Paycheck Protection Program (PPP).

In addition, the SBA followed up the application by releasing additional guidance in the form of two new Interim Final Rules (IFRs).

One of the IFRs relates primarily to loan forgiveness.  The other relates primarily to loan review procedures

Some of the highlights of these recent releases include the following (each of which is qualified in its entirety by the full text of the IFRs referred to above):

  • Borrowers may seek loan forgiveness for payroll costs for the eight-week covered period beginning on either (a) the date of disbursement of the PPP loan or (b) the first day of the first payroll cycle in the covered period (the “alternative payroll covered period”). 

  • Whether or not the borrower chooses to use the alternative payroll covered period to align with its next payroll date, non-payroll costs will still be measured during the original eight-week covered period.

  • For purposes of calculating loan forgiveness, “full-time equivalent employee” means an employee who works forty hours or more, on average, each week.

  • To ensure that borrowers are not doubly penalized, the salary/wage reduction applies only to the portion of the decline in employee salary and wages that is not attributable to the reduction in full-time equivalent employees.

  • Salary, wages, or commission payments made to furloughed employees during the covered period along with bonuses and hazard pay paid during covered period constitute “payroll costs” that are eligible for loan forgiveness (subject to the $100,000 annualized cap, as pro rated for the covered period).

  • A borrower’s loan forgiveness amount will not be reduced if the borrower laid-off or reduced the hours of an employee, then offered in writing to rehire the same employee for the same salary and same number of hours, or restore the reduction in hours, but the employee declined the offer (provided that the borrower meets certain requirements, including notifying the applicable state unemployment insurance office of the rejected offer within thirty days).

  • Forgiveness eligibility will be evaluated based on the rules and guidance available at the time of the borrower’s PPP loan application.

© Copyright 2020 Sills Cummis & Gross P.C.National Law Review, Volume X, Number 155


About this Author

Brian A. Haskel Corporate Attorney Sills Cummis & Gross New York, NY

Brian A. Haskel is resident in the Sills Cummis & Gross New York office.  He is a highly experienced corporate attorney, with extensive transactional experience in mergers and acquisitions, securities offerings and counseling on general corporate and securities law matters.  Mr. Haskel advises private equity, venture capital and hedge funds, public and private companies and issuers and underwriters, family offices, domestic and foreign clients.  His experience includes joint ventures, reorganizations, debt restructurings, securities law filings, tender and exchange offers, consent...

(212) 500-1541
Alan E. Sherman Tax & Corporate Attorney Sills Cummis & Gross Newark, NJ

Alan E. Sherman focuses on the area of tax and corporate planning. Mr. Sherman regularly counsels clients ranging from small business entrepreneurs to Fortune 500 public companies. He brings a unique advantage to clients — an understanding of business and related areas such as real estate and mergers and acquisitions and the application of the tax laws to achieve the maximum benefit. With this perspective, Mr. Sherman is able to suggest creative and practical tax solutions to client problems. He has extensive experience in the area of taxation of partnerships and limited liability companies, where many of the entities focus on real estate issues including syndications, restructurings and conversions of partnerships to limited liability companies and corporations. His mergers and acquisitions tax practice includes advising and structuring taxable acquisitions and dispositions and tax-free reorganizations and representing private equity funds in acquisitions and joint ventures.

Mr. Sherman is the co-author of the 2019 edition of New Jersey Inheritance and Estate Taxes.


  • Tax, Trusts and Estates
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Jason L. Sobel Real Estate Attorney Sills Cummis & Gross Newark, NJ

Jason L. Sobel is a Member of the Sills Cummis & Gross Real Estate Department and chairs the Firm’s F.O.R.E. (Family Owned Real Estate) Practice Group.  He primarily counsels retail, industrial, office and residential real estate owners and developers regarding acquisitions, sales, financing, and leasing with respect to their projects.  He also represents several lending institutions in commercial and construction financings as well as a number of clients with respect to retail liquor license transfers and related issues.  Additionally, Mr. Sobel assists different privately-held...

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Lori M. Waldron, Sills Cummis Law firm, Emerging Growth Attorney, Stock Acquisition Lawyer

Lori M. Waldron's practice focuses on the representation of both emerging growth and well-established public and private companies in sophisticated business transactions, with a particular emphasis on the life sciences and biotech industries. Ms. Waldron has extensive experience representing clients through all phases of their business cycles and advising them how to best take advantage of varying business opportunities, whether arising in the ordinary course of business or as an extraordinary matter. Her regular practice includes counseling her clients in connection with start-up...

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