Yes, by completing a Paycheck Protection Program loan forgiveness request, we believe that a borrower can appropriately report actual labor costs during the applicable covered period in excess of the original PPP loan amount. While the actual discount is ultimately limited to the PPP loan amount, the calculations provided in the loan forgiveness request allow labor costs to exceed the PPP loan amount, thereby allowing borrowers to potentially obtain full discount even if the borrower is subject to FTE and / or wage / hourly wage reductions.
(Note: This is a first in what we plan to be a series of posts regarding questions about the Paycheck Protection Program and Loan Remission. These questions and our answers are based on discussions with colleagues and clients, both lenders and borrowers. Our intention is to cover questions which, while potentially frequently asked, are not explicitly addressed in the official FAQs or directly in the draft final rules.)
In light of the 24 week period covered and the PPP loan amount being based on effectively 10 weeks of salary costs, we believe that most PPP borrowers will ultimately have salary costs that significantly exceed the principal amount of their PPP loan. This should not only facilitate the full forgiveness of the loan, but also ease the calculations as part of the forgiveness request and reduce the need to be aggressive about questionable expenses, FTE calculations or safe haven certifications. (As stated in the Forgiveness API FAQ, as long as the lenders agree with the final total rebate amount, these requests can be submitted as fully approved, even if there is disagreement on some positions.)
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