To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account. This post is to be used for informational purposes only and does not constitute legal, business, or tax advice. Each person should consult his or her own attorney, business advisor, or tax advisor with respect to matters referenced in this post. Bench assumes no liability for actions taken in reliance upon the information contained herein. There are two FTE Reduction Safe Harbors, that if either is met, the Borrower is exempt from having to reduce the eligible costs by the FTE Reduction Quotient (assuming it is below 100%).

• During the webinar, our team received more than 120 questions ranging from records retention to allowable costs.
• The same fact pattern would apply for the look back calculation but upon returning to the office, you now have reluctance from the staff or a decreased need for staff in the practice.
• It includes any documents supporting the firing of an employee or reducing their hours.
• Under this reasonable interpretation of the de minimis test discussed above, the business can include these employees in Table 1 or Table 2, as applicable.
• After filling up the application form, the borrower has to submit it along with all the documents.

This is where the concept of the full-time equivalent employee comes in. This is done by counting somebody who works half as much as a full-time employee as half an employee, and so on. https://kelleysbookkeeping.com/ It might sound cold, but it’s a vital metric when companies are applying for government loans, and when determining whether the company is large enough to have to follow certain laws.

How do you convert FTE to hours?

The borrower restored the FTE count not later than December 31, 2020, to the FTE levels in their pay period, including February 15, 2020. There is an extension in the deadline to the end of the eight weeks or 24 weeks covered period for loans taken after December 27, 2020. When a business owner applies for a PPP loan forgiveness, they can do so without worrying too much about FTE(full-time equivalency).

If businesses cannot sustain headcount, the entire purpose of the PPP loans is lost. The government carried out the PPP Loan Program under the Coronavirus Aid, Relief, and Economic Security Act to help small businesses pay their employees and aid these businesses in coronavirus-related obstacles. Looking at how it is becoming difficult https://kelleysbookkeeping.com/ for small businesses to sustain themselves in these crucial times, the U.S. federal government designed the PPP, Paycheck Protection Program loans in 2020, intending to help them. The amount of mortgage interest payments made during the covered period. This should only include a mortgage that was in place before February 15, 2020.

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The next step is comparing your average FTE as of the earlier of the date the loan forgiveness application is submitted or December 31, 2020 to the FTE count as of February 15, 2020. Therefore, if you end your chosen covered period at Week ten and apply for forgiveness during Week 12, you will need to calculate your FTEs as of Week 12. If your average FTE for the current period is greater than the FTEs as of February 15, 2020, no penalty applies and you passed the safe harbor test. Matt Vondersaar, first vice president and credit supervisor at East West Bank, cautions borrowers that the PPP guidance is likely to be updated further down the line. Borrowers that use Form 3508S are not exempt from reductions for forgiveness amounts based on reductions in FTE employees or in salaries or wages. Now that you have determined your loan forgiveness Covered Period and Reference Period, you can now calculate weekly FTE employee headcount averages for both periods.

• They may also use any consecutive 12-week period between May 1, 2019 and September 15, 2019.
• This determines the total of your payroll & non-payroll costs, minus your wage reduction amounts, multiplied by your FTE reduction quotient.
• Considering that the FTE unit of measure is based on the total number of hours worked — it may not indicate the actual number of people working in a company.
• She reached out to Jones & Roth about creating a FlexPath that would allow her to continue to advance professionally while working reduced hours.
• These totals are reported on PPP Schedule A Line 2 and Line 5 , which are then totaled on Line 12 of PPP Schedule A (See Form 3508, p.3, see link at footnote 1).