Restoration: if a borrower eliminates any reductions in FTE employees occurring between February 15, 2020 and April 26, 2020 (the safe harbor period) by December 31, 2020 (or, for a PPP loan made on or after December 27, 2020, by last day of the loan's Covered Period), the borrower is exempt from any reduction in loan ...

What does FTE reduction safe harbor mean?

FTE Reduction Safe Harbor. A goal of the PPP loan is to have you keep employees on payroll, rather than furlough or lay them off. So if your business does have a reduction in full-time equivalent employees (FTEs), your PPP loan forgiveness amount may be reduced.

How do you calculate FTE safe harbor?

Take 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. 2. Or, simply assign a 1.0 for employees who work 40 hours or more per week and 0.5 for employees who work fewer hours.

What is an FTE reduction exception?

FTE Reduction Exceptions: Indicate the FTE of (1) any positions for which the Borrower made a good-faith, written offer to rehire an employee during the Covered Period or the Alternative Payroll Covered Period which was rejected by the employee; and (2) any employees who during the Covered Period or the Alternative ...

What is the safe harbor for PPP loan forgiveness?

The borrower is eligible for the safe harbor if an employee's annual salary between February 15, 2020, and April 26, 2020, is more than or equal to their annual salary as of February 15, 2020.

FTE Safe Harbors and Reduction Exemptions Explained - Maximize your PPP forgiveness with these tips

What is FTE on PPP loan forgiveness application?

The U.S. Treasury defines a FTE as any employee who works 40 hours per week or more.

What is FTE documentation for PPP forgiveness?

Full-time equivalent (FTE)

Banks may also ask for various FTE supporting documentation, which could include: The average number of FTE employees on payroll per week between 2/15/2019 and 6/30/2019, and between 1/1/2020 and 2/29/2020.

Is business insurance covered under PPP?

A: Workers compensation insurance premiums are not included as the covered expenses for the PPP loan forgiveness.

What is the lookback period for PPP loans?

Borrowers have 10 months from the end of their covered period to apply for forgiveness before they will need to start repaying their PPP loan. Lenders have 60 days to make a decision on loan forgiveness.

Will PPP2 be forgiven?

Also, in the past, the SBA interpreted the 60% rule differently from the wording of the statute; however, in the PPP2 Act, it was made clear that borrowers will receive full loan forgiveness if they spend at least 60% of ‎their PPP loan on payroll costs over a time period of their choosing between 8 weeks and 24 weeks.

How is an FTE calculated?

The calculation of full-time equivalent (FTE) is an employee's scheduled hours divided by the employer's hours for a full-time workweek. ... For example, an employee scheduled to work 21 hours per week would be 0.6 FTE when the full-time workweek is 35 hours.

What are safe harbor guidelines?

A safe harbor is a legal provision in a statute or regulation that provides protection from a legal liability or other penalty when certain conditions are met.

How do you calculate FTE reduction?

But before you can do that, you need to find your FTE reduction quotient. So, let's find the FTE reduction quotient. Divide your FTEs during the covered period (12) by your FTEs during the reference period (15): 12 (FTEs during covered period) / 15 (FTEs during reference period) = 0.8.

What is a safe harbor period?

From Wikipedia, the free encyclopedia. A safe harbor is a provision of a statute or a regulation that specifies that certain conduct will be deemed not to violate a given rule. It is usually found in connection with a more-vague, overall standard.

What is meant by safe harbor?

A safe harbor is a legal provision to sidestep or eliminate legal or regulatory liability in certain situations, provided that certain conditions are met.

What does FTE stand for?

A full-time equivalent, sometimes abbreviated as FTE, is a unit to measure employed persons or students in a way that makes them comparable although they may work or study a different number of hours per week.

Are owners included in FTE for PPP?

Owner/employees should not be included in the FTE calculation; however, their payroll is included in payroll costs based on compensation restrictions in place. Exclude overtime from the calculation as anything over 40 hours is 1.0.

What is the FTE lookback period?

For salaried employees, the Average Annual Salaries for the Lookback and Covered Periods are calculated by annualizing the gross pay within the applicable period. For the Lookback Period, which is 13 weeks, the Average Annual Salary is the Gross Pay for the period multiplied by 4 to convert it to an annual figure.

What is the deadline for PPP loan forgiveness 2021?

First PPP Loan Forgiveness Deadline is August 30, 2021

Your deadline for submitting a PPP loan forgiveness application ends 10 months after your covered period ends. The common ending date for the covered period for the first round PPP loan draws was October 30, 2020.

Can you use the PPP loan to pay yourself?

Over the course of those ten weeks, 10% of your PPP loan is going to transfer right back into your personal account. This way you can use the funds and show you've paid yourself over ten weeks or 2.5 months. ... Someone who received a $10,000 PPP loan would pay themselves $1,000 a week for ten weeks.

Can you pay rent with PPP loan?

Yes, as long as you pay it on the next regular billing date, any of those eligible non-payroll expenses (utilities, rent, mortgage interest) can be claimed for forgiveness, prorated to the end of the covered period.

Can you increase salaries with PPP loan?

This limitation prevents an owner-employee from maximizing PPP loan forgiveness by increasing salary during the covered period relative to what the owner-employee was paid in 2019 or 2020, prorated for a 2.5 month period.

What is considered FTE documentation?

FTE: Documentation showing hours paid to determine: a. ... Nonpayroll Costs: Documentation verifying eligible payments during the Covered Period: a. Business mortgage interest payments – copy of lender amortization schedule and receipts or cancelled checks.

What document shows FTE?

• Form 941 or similar filled to the IRS.
• State quarterly tax reports.
• Employee salary reports.
• Unemployment insurance tax filings.

How does FTE affect PPP?

The borrower's count of FTE employees during their covered period is divided by the FTE count from the selected base period. ... The FTE reduction quotient is multiplied by the total PPP loan amount to arrive at your maximum forgiveness amount.