Rising Above the Chaos

Prepare for PPP Forgiveness Guidance


Since the passage of the CARES ACT at the end of March, the Buffalo business community has pulled together to ensure that we access as many relief options as possible.  The Payroll Protection Program continues to be a primary focus.

While the program gives businesses access to cash, it is fair to say that we all earned a few more gray hairs in the process!  After the application process, our community is anxious to understand the forgiveness process.

Unfortunately, we continue to await the final forgiveness guidance.  The AICPA has stepped in to publicly urge the Treasury Department and SBA to finalize and release the forgiveness guidance as soon as possible.

Through this time of uncertainty, our goal to Rise Above the Chaos remains. We have outlined a few steps you can take now as well as additional considerations.


  • Forgiveness Application. Add a reminder to your calendar to request the forgiveness application from your banker 8 weeks after you received PPP funds.
  • Schedule Strategy Call. Schedule a phone call with us for the 6th week after you received PPP funding. Together, we will develop a strategy to optimize the guidance issued at that time.
  • Employee Roster. Maintain an employee roster to easily track the hours each employee worked, and the wages and state payroll taxes paid to that employee in each pay period.
    • The roster should cover the time periods of 1/1/20 – 3/31/20 as well as 8 weeks from the date you received the PPP funds.  These 2 time periods will be compared.
    • Most payroll systems have system generated reports for this purpose. Identify which report you will use. We strongly recommend an excel or .csv version of the report.  Since the forgiveness rules remain vague, reporting should be geared toward flexibility.
  • Average Full-Time Employee Equivalent (FTE). Calculate your average FTEs for 2.15.19 through 6.30.19, as well as 1.1.20 through 2.29.20.  SBA FTE definition & Calculator.
  • Health Insurance & Retirement Payments. Prepare to report and substantiate payments made in the 8 week loan period.
    • Track owner and employee payments separately
    • If you typically make retirement matching payments annually, prepare to make pro rata match payment prior to the end of the 8 week period.
  • Utility, Rent & Mortgage Interest Payments. Prepare to report and substantiate utility, rent & mortgage interest payments made in the 8 week loan period. This is only relevant to services that started before February 15, 2020. These payments include:
    • Electricity
    • Gas
    • Water
    • Telephone
    • Internet
    • Mortgage Interest
    • Rent Rent to related parties has not been disqualified to date. There is no guidance regarding past due rent or future payments of rent.
    • Transportation Costs The definition of these costs is not yet defined.


  • Terms. Fixed Rate of 1% interest for 2 years
  • First Payment. 7th month after you received funds
  • Prepayment. You can prepay the loan at any time without penalty 


The US Chamber of Commerce continues to provide high quality, easy to digest documentation on this topic: US Chamber of Commerce SBA Guide & Checklist

  • Reduction Components. There are 3 components to the forgiveness reduction calculation. We are listing them here but note there are many open questions for the SBA and Treasury Department.

    1.  Number of Full-Time Equivalent Employees. SBA FTE Definition & Calculator.
    2.  Amount of Wages Paid.
    3.  Payroll Costs must comprise of at least 75% of the forgiveness amount.
  • Notable Exceptions
    • A maximum of $15,385 in salary, wages and tips per employee can be forgiven.
    • Owner Compensation Replacement is limited to 8 weeks of 2019 net profit, at a maximum of $15,385. (This applies to sole proprietors and Partnerships).
    • Forgiveness will not be reduced by employees that the employer laid off, attempted to rehire, but the employee declined the offer. (Note: There must be a written good faith offer, the rejection must be documented and the employee may forfeit eligibility for continued unemployment compensation).
    • For employees that make $100,000 a year, it appears that employers can reduce their salary by more than 25% without risking forgiveness reduction.


  • Tax Exempt Forgiveness. The amount of forgiveness will not be taxed.
  • Forgiven Expenses are NOT Deductible. Expenses paid for with forgiven PPP funds cannot be deducted.  This prevents doubling up on the tax benefit.
  • Owner Compensation Replacement? Tax guidance as not been issued regarding the treatment of owner compensation replacement for sole proprietors and partnerships.


  • Strong Banking Relationship is Vital. Build and maintain a strong relationship with your banker. Keep in contact with them on regular basis to help ensure early access to any information they may have.
  • Buffalo Business Community. Remain in touch with your fellow business owners. Share knowledge, experience, and support.
  • The Kane Firm. We will continue to watch for final guidance and reach out as information becomes available for each unique situation. Keep us in the loop on what you are experiencing and let us know of any major business changes!


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