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CFO Consultant | CFO Services | Managing uncertainty | Outsourced CFO | Outsourced CFO Services | June 17, 2020

The Paycheck Protection Program (PPP) has provided many small and mid-sized companies with much needed funding to sustain their operations during the current pandemic.  In fact, more than 77% of small businesses have applied for PPP loans since the application process opened on April 3, 2020.  Since that opening date, more than $530 billion in PPP loans have been approved, allowing for 2/3, or 4.5 million, of those businesses who applied to receive this vital funding.

Business leaders who received funding eagerly awaited guidance on how to properly spend the funds in order to get the maximum amount of debt forgiveness from the Small Business Administration (SBA).

On May 15th, the SBA published the forgiveness application, a complicated 11 page document which provided answers to some burning questions.  For example, an important clarification was given for the definition of a full-time equivalent, and we now know they are defined by the SBA as 40 hours.  However, answers to some other critical questions were insufficiently addressed, such as the question of whether or not qualified spending is based on a cash or accrual basis, which remains undefined at this time.

The Forgiveness Application is quite lengthy because it contains instructions, definitions, calculation forms, schedules and worksheets.  There is good news, however, in that there are clear attempts to help businesses maximize forgiveness and ease the burden to borrowers. A few of those are:

  • Creation of an alternative payroll coverage period
  • A simplified full-time equivalent (FTE) method
  • More than one Safe Harbor component

However, to truly maximize forgiveness, companies will have to perform all possible calculations before landing on the one that yields the highest forgivable amount.  While there is a path to obtaining a high level of forgiveness, the calculation is anything but simple and easy. 

At the beginning of June, Congress and the President approved legislation that extends the time companies have to use the loan from 8 weeks to 24 weeks.  This extension will provide a much needed buffer, allowing borrowers a longer time frame in which to utilize these funds. In addition, it may also make the PPP program more attractive to the 20+% of small businesses who have yet to apply for the $130 billion still available in the program.

Further clarification in the form of FAQs is expected and significant issues are still pending legislation, such as the tax deductibility of forgiven expenses.

CFO Strategic Partners can help businesses who wish to apply for PPP funds, have received PPP funding and are concerned about maximizing forgiveness, and those who want to ensure their documentation is robust enough to stand up to an SBA audit.  Our team of experienced, on-demand CFOs can provide the support needed during any stage of the PPP loan or forgiveness process.  Visit us at, email us at or call (407)426-8288 to learn more.

NOTE:  Given the current evolving economic climate, CFOSP is publishing more frequent communications on this topic based on what our clients are experiencing and our firm’s expertise.  Stay tuned for updates or click here for more content on this topic.

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