We have received a number of very good PPP related questions that unfortunately at this point simply do not have answers.
Our suggestion to you is do not assume anything. The SBA operates in a logic free zone, and is very “by the letter and by the book” when it comes to rules. While Citizens Bank will try to give you the most accurate and up to date information, the simple fact is that loan forgiveness depends on you - the borrower.
Please do everything you can to make “conservative” assumptions where assumptions are required. Several examples of such questions are as follows:
1. If I have employees who have been laid off and they now refuse to come back, either because of the COVID fear or because of the level of unemployment insurance they can receive, will that be held against me?
We would assume the answer to that is yes – if they do not accept wage payments from you, those amounts likely can’t be claimed for forgiveness.
2. Am I able to pay my employees for previous pay periods with PPP funds?
The rules on this are not clear, but it likely can be assumed that if the actual hours worked and the payday when funds are transferred to your employee falls prior of your 8 week “window” that the pay would not be considered for forgiveness. What is not fully clear is the accrual question – If the hours were partially worked outside the 8 week window, but the pay is transferred to the employee during the 8 week window, will that be forgiven? There is no clear answer to this, but the regulation indicates that: The actual amount of loan forgiveness will depend, in part, on the total amount of payroll costs, payments of interest on mortgage obligations incurred before February 15, 2020, rent payments on leases dated before February 15, 2020, and utility payments under service agreements dated before February 15, 2020, over the eight-week period following the date of the loan. However, not more than 25 percent of the loan forgiveness amount may be attributable to non-payroll costs. That would seem to indicate the actual expenditure during the 8 weeks is what counts. Again though – there is no real clarity on this point at this time.
3. Am I able to give my employees a small bonus or a higher wage during the 8 week period.
There is nothing in the Rules and Regulations document or the FAQ that forbids this, but at the same time there is nothing that specifically allows it.
The only thing that is clear at this point is there are more questions than answers. We will seek to convey information and updates to you as soon as we receive them.
Citizens Bank recommends that you consult your outside advisors and experts in all matters relating to the PPP and loan forgiveness. We will work to provide you timely and accurate information, but the burden for obtaining forgiveness rests on the borrower. All information provided in this format or any other communication regarding the program is believed to be accurate, but no guarantee is or can be made by any Citizens Bank representative.