Pizza Today - February 2021 - 28
and it changes our day-to-day decisions. "
As is commonplace with federal legislation, PPP funding arrives with its share
of caveats and fine print. With the help of
Brian Smith, director of compliance for
Restaurants Solutions, Inc., a Coloradobased restaurant management firm, as
well as information from the U.S. Small
Business Administration (SBA) and state
restaurant associations, Pizza Today addresses key PPP-related questions.
To earn forgiveness, how - and
when - do I need to spend my PPP
While PPP recipients like Chudgar
were initially required to spend at least
75 percent of their loan amount on
employee compensation within eight
weeks, the PPP Flexibility Act passed in
the summer extended that time frame to
24 weeks. The Flexibility Act also reduced
the employee compensation amount to
60 percent, thereby enabling business
owners to spend up to 40 percent of
PPP funding on expenses such as rent or
Though restaurants could devote PPP
funds to non-payroll expenses, and likely
with sound reason for doing so, Smith
says those who devoted every PPP
penny to payroll costs should have " more
streamlined reporting ... when it comes
to meeting the loan's reporting requirements. "
Are only salaries or wages covered by loan forgiveness or do tips
and other bonuses count as well?
According to the SBA, payroll costs
include all forms of cash compensation
paid to employees, though that compensation is limited to $100,000 per
employee on an annualized basis.
What's the deal with the fulltime equivalent (FTE) employee
Part of the forgiveness process includes
a calculation to determine if business
owners have reduced staff. If so, the forgiveness amount could decrease.
However, exemptions exist if a borrower can document good-faith efforts
2 8 / P I Z Z AT O D AY. C O M / F E B R UA R Y 2 0 2 1
to rehire previous employees, such as
furloughed staff, or bring similarly qualified individuals into vacant positions. To
capture that exemption, borrowers must
provide written records showing offers to
rehire past employees and their rejection
of such offers as well as reasonable efforts
to hire new staff.
In addition, borrowers unable to return
to pre-pandemic business levels due to
compliance with public health orders,
including mandated restaurant closures,
have a safe harbor from reductions in
forgiveness due to FTE employee counts.
And what about owner's compensation? Can I use PPP funding
to pay myself?
Yes, though it is limited. According to
the SBA, " the amount of loan forgiveness requested for owner-employees
and self-employed individuals' payroll
compensation is capped at $20,833 per
individual in total across all businesses in
which he or she has an ownership stake. "
(A caveat: if borrowers received their PPP
loan before June 5, 2020 and elected to
use an eight-week covered period, the cap
drops to $15,385.) In contrast, employee
compensation is capped at $46,154 over a
24-week covered period.
" Congress issued PPP funding to keep
employees employed, not owners paid, "
I received an EIDL grant, too.
Does that affect PPP forgiveness?
In COVID-19's early days, many small
businesses received an Economic Injury
Disaster Loan (EIDL) in advance of
their PPP loan. An existing government
program, EIDL pushed money into the
economy as PPP got up and running.
If a business received an EIDL advance
in addition to a PPP loan, the SBA will
deduct the amount of EIDL funds from
the PPP forgiveness amount.
" Quite simply, you can't have both, "
When can I apply for forgiveness?
Last fall, many banks began suggesting
that small business owners who received
PPP funding begin applying for forgiveness as soon as possible. Borrowers need
not feel such urgency. In fact, a loan
forgiveness application may be filed any
time before the maturity date of the loan,
which is either two or five years from loan
But here's the nitty-gritty from the
SBA: " If a borrower does not apply
for loan forgiveness within 10 months
after the last day of the borrower's loan
forgiveness covered period, [then] loan
payments are no longer deferred and the
borrower must begin making payments
on the loan. "
Got it? PPP recipients have a
10-month window from the end of their
coverage period to apply for forgiveness.
" After 10 months, you can still ask for
forgiveness, but you also need to start
making payments, " Smith says.
Given how fluid things are with
COVID-19, where can I access the
most up-to-date, relevant information on PPP loans and forgiveness?
Yes, things are fluid. Very fluid. Into
late 2020, for instance, there were lingering - and critically important - questions
about the deductibility of expenses covered with PPP funding left unanswered.
In conjunction with the National
Restaurant Association, state restaurant associations have been monitoring
developments out of Washington, D.C.
alongside any relevant local or state
matters that might come into play. In
addition, the banks that issued PPP loans
should be actively following legislation
and guidance out of Washington as well
to support restaurant owners.
How long should I keep my PPP
Records for all PPP loans must be kept
for up to six years in the event of an audit.
" And I do think there will be audits
here, so good documentation will be
important, " Smith adds. n
DANIEL P. SMITH Chicago-based
writer has covered business issues and best
practices for a variety of trade publications,
newspapers, and magazines.
Pizza Today - February 2021
Table of Contents for the Digital Edition of Pizza Today - February 2021
Pizza Today - February 2021
Mike’s Monthly Tip
Man on the Street
Tony’s Trending Recipe
Knead to Know
The Current Job Market
Ins and Outs of Expanding
Pizza Expo 365
Small Market Mom & Pops
Pizza Today Yellow Pages
Pizza Today - February 2021 - CT1
Pizza Today - February 2021 - CT2
Pizza Today - February 2021 - Pizza Today - February 2021
Pizza Today - February 2021 - Cover2
Pizza Today - February 2021 - Commentary
Pizza Today - February 2021 - 4
Pizza Today - February 2021 - 5
Pizza Today - February 2021 - 6
Pizza Today - February 2021 - 7
Pizza Today - February 2021 - Digital
Pizza Today - February 2021 - 9
Pizza Today - February 2021 - Conversation
Pizza Today - February 2021 - 11
Pizza Today - February 2021 - Mike’s Monthly Tip
Pizza Today - February 2021 - 13
Pizza Today - February 2021 - Man on the Street
Pizza Today - February 2021 - 15
Pizza Today - February 2021 - Building Blocks
Pizza Today - February 2021 - 17
Pizza Today - February 2021 - Tony’s Trending Recipe
Pizza Today - February 2021 - 19
Pizza Today - February 2021 - Knead to Know
Pizza Today - February 2021 - 21
Pizza Today - February 2021 - 22
Pizza Today - February 2021 - 23
Pizza Today - February 2021 - Destinations
Pizza Today - February 2021 - 25
Pizza Today - February 2021 - PPP Forgiveness
Pizza Today - February 2021 - 27
Pizza Today - February 2021 - 28
Pizza Today - February 2021 - 29
Pizza Today - February 2021 - The Current Job Market
Pizza Today - February 2021 - 31
Pizza Today - February 2021 - 32
Pizza Today - February 2021 - 33
Pizza Today - February 2021 - Ins and Outs of Expanding
Pizza Today - February 2021 - 35
Pizza Today - February 2021 - 36
Pizza Today - February 2021 - 37
Pizza Today - February 2021 - Latin-inspired Pizzas
Pizza Today - February 2021 - 39
Pizza Today - February 2021 - Adding Sandwiches
Pizza Today - February 2021 - 41
Pizza Today - February 2021 - 42
Pizza Today - February 2021 - 43
Pizza Today - February 2021 - Pizza Expo 365
Pizza Today - February 2021 - 45
Pizza Today - February 2021 - Small Market Mom & Pops
Pizza Today - February 2021 - 47
Pizza Today - February 2021 - 48
Pizza Today - February 2021 - 49
Pizza Today - February 2021 - Product Showcase
Pizza Today - February 2021 - 51
Pizza Today - February 2021 - Pizza Today Yellow Pages
Pizza Today - February 2021 - 53
Pizza Today - February 2021 - 54
Pizza Today - February 2021 - 55
Pizza Today - February 2021 - 56
Pizza Today - February 2021 - 57
Pizza Today - February 2021 - The Marketplace
Pizza Today - February 2021 - 59
Pizza Today - February 2021 - 60
Pizza Today - February 2021 - 61
Pizza Today - February 2021 - 62
Pizza Today - February 2021 - 63
Pizza Today - February 2021 - 64
Pizza Today - February 2021 - 65
Pizza Today - February 2021 - Expo Spotlight
Pizza Today - February 2021 - Cover3
Pizza Today - February 2021 - Cover4