There is a general misconception about the cap on wages eligible for forgiveness under PPP. We have played into it ourselves in an effort to keep the provisions simple; because, honestly, if we gave you all the details of the legislation at once we would lose you in about 30 seconds. We can barely keep up ourselves. Here’s the short answer: the maximum any one employee can receive from PPP funds and be eligible for forgiveness is $15,385, not $16,666—in whatever increment it’s paid. For those of you satisfied to accept that as fact, you can stop reading.
For those of you who want to understand, here’s the deal. Both the application process and the forgiveness process limit the amount of wages to $100K. Up to now, you had generally been applying for the loans and those applications were based on monthly payroll figures—so you take $100K, divide by 12, and come up with $8333 per month, which is what you used in your application. And that’s the only figure we have mentioned to this point. BUT the formula for forgiveness is different. It’s based not on monthly payroll figures but an 8 week figure. And while 8 weeks sort of sounds like 2 months—which would be $16,666—in reality, it isn’t. To calculate max wages for forgiveness you take $100K, divide by 52, and multiply by 8, and you come up with $15,385.
So to summarize, each employee that is paid from PPP funds is limited during the 8 week period to $15,385. This can be paid as
One payment of $15,385 or
$7692 per “month” or
$1923 per week or
$3846 every 2 weeks or
$274.73 per day if you wanted. Would you like the figure per hour? 😉