Have you thought about what it will look like to restore your workforce? As more and more businesses receive loans through the Paycheck Protection Program (PPP) and consider recalling their employees, there are several key considerations to take into account.
Established by the CARES Act, the PPP is an initiative that offers aid to small businesses via forgivable federal loans. Borrowers can qualify for up to $10 million in 100% federal government guaranteed covered loans. The SBA guidelines state that PPP loan funds will be forgiven (1) if an employer keeps all employees on payroll for eight weeks from the date that the funds are disbursed and (2) for the money that is used for allowable purposes, such as payroll, rent, utilities, and more.
As the recipient of a PPP loan, you should be sure to keep the following in mind as you bring your team back to work:
- Make official recall offers to your employees in writing. As long as you attempt to rehire any laid-off or furloughed employees at the same salary/wages and number of hours, any refusal to return to work will not factor into your loan forgiveness reduction calculation. Be sure to document all employment offers in order to have evidence in the event that you need it to justify your loan forgiveness reduction calculation.
- Put any refusals of the recall in writing. Similarly to documenting your recall offers, you should be sure to collect written documentation of any employees that decline your offer to return to work. It is a good idea to keep a record of all communication with your employees during this process.
- Report your recall offers to your state. In the process of making your rehire offers, consider reminding your workforce that a rejection of the rehire may have an impact on their eligibility to collect unemployment. You can tell them that you are required to report the rehire offers to the Maryland Division of Unemployment Insurance (DUI). Click here for instructions on the Maryland reporting process.
If you have received a PPP loan, be sure to follow the steps above in order to maximize the amount of your loan that is eligible for forgiveness. Please do not hesitate to contact your HeimLantz accounting advisor with any questions regarding PPP loans and recalling your workforce.