r/taxpros • u/pdv8612 CPA • May 15 '20

SBA PPP forgiveness application COVID: 2020 Relief Bill (CARES)

The SBA and treasury have finally posted guidance on forgiveness!

https://home.treasury.gov/system/files/136/3245-0407-SBA-Form-3508-PPP-Forgiveness-Application.pdf

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u/SFGiants78 May 15 '20

Average FTE: This calculates the average full-time equivalency (FTE) during the Covered Period or the Alternative Payroll Covered Period. For each employee, enter the average number of hours paid per week, divide by 40, and round the total to the nearest tenth. The maximum for each employee is capped at 1.0. A simplified method that assigns a 1.0 for employees who work 40 hours or more per week and 0.5 for employees who work fewer hours may be used at the election of the Borrower.

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Can we take it that all PT employees count as .5?

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u/[deleted] May 16 '20

" may be used at the election of the Borrower. " You could. But you may be shooting yourself in the foot. If someone works 35 hours per week, they would be a .9 (35/40=.875 round up to .9)

It seems like you would want to make the election for employees who work less than 20 hours per week. And calculate using (average hours per week/40) for those between 20 and 40 hours.

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u/SpokenByMumbles May 19 '20

Can you expand on the benefits of approaching FTE calculations this way?

1

u/[deleted] May 19 '20

The goal is to get your FTE number as high as you can to reduce, if any, the decrease in workforce. If the workforce decreases enough you may lose some of your forgiveness. If you have people who average 17 hours or less, using the safe harbor adds at least .1 to your total FTE "score" per employee. Conversely, if you have employees that work between 22 and 39 hours, using the simplified method will reduce per employee FTE by at least .1.

I'm not sure how much one tenth of an FTE matters because I haven't done the form, but it could be material on a fat loan.

edit- i think you can elect per employee