The Loan Forgiveness Application (the Forgiveness Application or the Application) has a lot of pages and instructions. The Application has five parts: Loan Forgiveness Calculation Form; Schedule A; Schedule A Worksheet; Documentation Requirements; and a Borrower Demographic Information Form. The demographic information is optional, while the calculation form and Schedule A must be submitted to the lender. Two common questions about the Application include (1) when it is due, and (2) how a borrower answers questions about the number of employees.
There is no due date established in either the CARES Act (the Act), the statute establishing the PPP, or in guidance issued by the SBA. Because the Application requires submission of IRS Form 941, the Application must wait until Form 941 is filed and, presumably, taxes paid. After Form 941 is available and the borrower has all other required documentation, the Forgiveness Application may be submitted.
The Application is also evoking memories of an input on the initial Borrower Application Form, which required applicants to input their “Number of Employees.” The Forgiveness Application requests “Employees at Time of Loan Application” and “Employees at Time of Forgiveness Application.” What information is being sought by the SBA? The total number of individuals on the payroll at the date of each application or something else? There is no guidance on how to compute the requested number, and it is not clear why this information is requested. Nevertheless, a borrower should be consistent with the approach used to determine and complete the request for number of employees when completing the initial Borrower Application Form. One approach is to use the definition of an “employee” used by the SBA for determining whether a borrower meets the size requirement for the Program; generally, 500 employees or less. In that instance, each person employed by the borrower, whether employed full-time, part-time or on some other basis, is counted as an employee. Provide the best information you have as of the date of your application and based on your understanding of the PPP. Document the basis for your numbers, including any changes in borrower affiliates and their related employees. The more important questions about the number of employees are related to full-time equivalent (FTE) employees and are addressed later in the Forgiveness Application.