PPP Loan Forgiveness Application Released — What is APCP?

As expected, the SBA released a copy of the PPP loan forgiveness application. While there are still many unanswered questions, some have been addressed, as well as providing several shortcuts and relief in other areas.

Borrowers with a biweekly payroll can now calculate the 8-week period running (56 days) from the date the funds were deposited or the “period that begins the first day of their first pay period following their PPP loan distribution date” (the “Alternative Payroll Covered Period”-APCP).

For example, if you received your loan proceeds on Monday, April 20th and the first day of the first payroll period following your receipt of the Loan as defined by the APCP is April 26th, the first day of the APCP is April 26 and the last day of the APCP is Saturday, June 20th (instead of 4/20 -6/14 if you used the loan deposit date).

But PLEASE note-The APCP CAN ONLY BE USED FOR PAYROLL COSTS. It cannot be used for rent, interest, and utilities.

The application also provides some guidance on the timing of payments:

“Payroll costs incurred but not paid during the Borrower’s last pay period of the Covered Period (or Alternative Payroll Covered Period) are eligible for forgiveness if paid on or before the next regular payroll date.”

This helps because it means that you do not have to reschedule your last payroll to fit into the 8-week covered period.

The loan application similarly provides for some relief for rent, etc.:

An eligible nonpayroll cost must be paid during the Covered Period or incurred during the Covered Period and paid on or before the next regular billing date, even if the billing date is after the Covered Period.”

Here it clearly states what utilities are covered:

“business payments for a service for the distribution of electricity, gas, water, transportation, telephone, or internet access for which service began before February 15, 2020.”

On another note, I have been asked if owners (owner-employees, self-employed individuals or general partners) are allowed to give themselves a bonus/raise to bump up their payroll costs- The answer is NO.

Also, it is now more unclear whether health insurance/pension payments made on behalf of S corporation shareholder-employees are eligible for forgiveness (maybe not). We will have to wait for more guidance.

Adding a Second Safe Harbor

Earlier the SBA had said that if an employer reverses earlier pay cuts or employee counts by June 30th no reduction on foreverness occurs (this is called a safe harbor).

Now they have added a second safe harbor;

You can compare average wages on June 30 to February 15. If the June 30 amount is equal to, or greater than the February 15 amount, there is no reduction in forgiveness. Basically, this means that they look at the averages for all employees versus the individual employee.

They have also clarified the calculation of Full Time Equivalent (FTE) employees:

If an employee works 40 hours or more they count as 1FTE. Employees that work less than 40 hours is counted as .5 of an FTE.

Finally, for FTE reduction exceptions they say:

“ 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(CP) or the Alternative Payroll Covered Period (APCP) which was rejected by the employee; and (2) any employees who during the CP or the APCP (a) were fired for cause, (b)voluntarily resigned, or (c) voluntarily requested and received a reduction of their hours.”

There is no reduction in loan forgiveness if these positions are not refilled.

The application also details what documents you will need to provide the bank and what you will need to keep for your records.

When the time comes for filing for forgiveness, banks will contact you and request you to fill out the application. Most likely it will be an online process.

There is still a lot of confusion, given the numerous unanswered questions and discussions going on regarding the PPP. So we will have to wait for additional guidance that should be forthcoming.

In the meantime, if you would like a copy of the SBA PPP Loan Forgiveness application let us know.

When the time comes to file the Loan Forgiveness application, our firm will be available to assist you.


Read all our Coronavirus updates as information becomes available.

Sign up for our free e-newsletter.