SBA 7(a) Loans up to $500k Now Available

PPP Loan Forgiveness Glossary of Key Terms

  • Baseline Period: (see Look-Back Period)
  • Covered Period: The period during which PPP loan funds must be spent on payroll and other eligible expenses to be included for forgiveness. The covered period is elected by the borrower and may be any number of weeks from 8 to 24, beginning on the loan disbursement date
  • Covered Operations Expenditures: Payments for any business software or cloud computing service that facilitates business operations, product or service delivery, the processing, payment, or tracking of payroll expenses, human resources, sales and billing functions, or accounting or tracking of supplies, inventory, records and expenses
  • Covered Property Damage Costs – Costs related to property damage and vandalism or looting due to public disturbances that occurred during 2020 that was not covered by insurance or other compensation
  • Covered Supplier Costs – Payments to a supplier of goods for goods that are essential to the operations of the borrower at the time they are made and are made pursuant to a contract, order or purchase order in effect any time prior to the covered period or, with respect to perishable goods, in effect before or at any time during the covered period
  • Covered Worker Protection Expenditures – Operating or capital expenditures related to the maintenance of standards for sanitation, social distancing, or any other worker or customer safety requirement related to COVID-19
  • Employees: Staff paid via payroll for whom the borrower files payroll tax forms. These can be either full-time or part-time employees
  • Employer-Paid: Costs paid by the employer for fringe expenses (specifically excludes amounts withheld from Gross Pay and paid to a third party on behalf of the employee)
  • EZ Form: Loan Forgiveness Application Form 3508EZ, a shorter forgiveness application form available to borrowers who meet one of three specific criteria
    • Self-employed individuals with no staff
    • Borrowers who did not reduce salary or hourly wage of any person earning less than a$100,000 annualized wage by more than 25% and did not reduce the number of employees or average number of paid hours between January 1, 2020 and the end of their chosen Covered Period
    • Borrowers who did not reduce salary or hourly wage of any person earning less than a$100,000 annualized wage by more than 25% and the borrower was unable to return to operate at pre-pandemic business levels (pre-February 15, 2020) due to compliance with government requirements for reduced business activity due to COVID-19
  • FTE Exception: Employees who meet defined criteria for exclusion from the FTE calculation. The FTE of each of these employees is adjusted in the covered period such that it is equal to the FTE of the employee in the baseline, or look-back period
  • FTE Reduction Factor: Any reduction in staff, based on an average 40-hour Full Time Equivalent work week, as compared to the borrower’s chosen look-back period
  • FTE Reduction Quotient: Calculated as FTE in Covered Period divided by FTE in chosen look-back period, the FTE Reduction Quotient is multiplied by the total of all expenditures eligible for forgiveness less any Salary/Hourly Wage Reduction to calculate the eligible amount of forgiveness
  • FTE: 40-hour work week basis used to determine the number of Full Time Equivalent staff
  • Government requirements for reduced business activity: Statements made by the Centers for Disease Control and Prevention (CDC), Dept of Health and Human Services (HHS) or the Occupational Safety and Heath Administration (OSHA) that local jurisdictions relied upon in writing to issue similar orders which restricted commerce
  • Gross Pay: Wages, salaries, commissions, vacation, sick pay, separation or similar compensation before employee tax and benefit deductions.
  • Inability to Return to Pre-February 15, 2020 Levels of Business Activity: A borrower’s inability to operate at pre-pandemic business levels due to compliance with government requirements or guidance issued between March 1st and December 31st, 2020. Note that this is not the same as a business that experienced a reduction in business activity, but rather means that the business was prevented from returning from that reduction due to documented federal requirements for sanitation, social distancing, etc.
  • Incurred: Expenses that occurred during the loan Covered Period, whether paid during the Covered Period or not (example: hours worked but not yet paid)
  • Interest: Amount paid in excess of principal for the use of money borrowed
  • Lease: Amount paid for business equipment leases documented by an agreement that was in place prior to February 15, 2020
  • Loan Origination Date: Date funds are disbursed to borrower.
  • Look-Back Period: The various comparison periods used in calculating either Salary or FTE Reduction Factors
  • Medical: Amounts paid by employers for employee health insurance (medical, dental, vision, disability, life). Amounts are net of any contributions made by employees
  • Mortgage: Amount paid for principal (allowed use of PPP funds but not forgivable) and interest (allowed and forgivable) when a business owns the real estate in which the business is conducted, so long as the mortgage was in place prior to February 15, 2020
  • Non-Payroll Costs: Mortgage Interest, Rent, Equipment Lease Expenditures, Utilities, Covered Operations Costs, Covered Property Damage Costs (net of insurance), Covered Supplier Costs, and Covered Worker Protection Expenditures
  • Owner’s Compensation: Amounts paid to Owners, Owner-Employees, Partners and Self-employed individuals
  • Paid: Cash disbursed in the loan Covered Period (which may or may not have been incurred during the Covered Period)
  • Pay Cycle Frequency: A borrower’s weekly, bi-weekly (every two weeks), semi-monthly (two times per month, generally the 15th and last day of the month) or monthly payroll cycle
  • Payroll Costs: Gross pay up to an annualized maximum of $100,000 per US employee, plus the employer’s cost of providing employee healthcare and retirement benefits, plus the cost of employer-paid state and local payroll taxes (but excluding federal employer tax costs and FFCRA paid leaves), plus allowable owner’s compensation
  • Rent: Amount paid for office and business space documented by a rental agreement that was in place prior to February 15, 2020
  • Retirement: Amounts paid by the employer to fund employee retirement plans
  • Safe Harbors: Various provisions in the PPP Loan or Loan Forgiveness applications that reduce or eliminate legal or regulatory liability of the borrower if prescribed conditions are met
    • Borrower’s good faith certification as to eligibility for PPP loans if that borrower has a loan amount of less than $2 million
    • Granted to those who repaid borrowed amounts in full prior to May 17, 2020 indicating they were ineligible to participate in the PPP
    • Granted to those borrowers who can document exemption from a variety of FTE and Salary reduction factors due to specific circumstances beyond their control
  • Salary Reduction Factor: Any reduction in stated annual salary or straight-time hourly wage of an employee in excess of 25%. The Salary Reduction Factor is calculated by comparing the employee’s stated annual salary or straight-time hourly wage in the covered period to that in the most recent full calendar quarter before PPP loan funds were received. Please note that this calculation need only be performed on those employees that earned less than $100,000 annualized in every pay period during the year used to calculate the PPP loan amount
  • Standard Form: Loan Forgiveness Application Form 3508
  • State and Local Taxes: Employment taxes required to be paid by the employer and directly related to employee compensation
  • Transportation: Transportation utility fees
  • Utilities: Water, Gas, Electric, Internet connectivity, Telephone and Transportation costs

To qualify for an SBA 7(a) small business loan, your business must be:

  1. U.S.-based and operated
  2. Owner supported / owner funded
  3. Eligible per the SBA’s requirements

Your loan amount will determined by the business’ average annual revenue, FICO score, and years in business