{"id":9411,"date":"2020-05-21T13:32:06","date_gmt":"2020-05-21T18:32:06","guid":{"rendered":"https:\/\/www.cainwatters.com\/digitalblogs\/?p=9411"},"modified":"2020-11-16T14:11:09","modified_gmt":"2020-11-16T20:11:09","slug":"alternate-payroll-covered-period","status":"publish","type":"post","link":"https:\/\/www.cainwatters.com\/digitalblogs\/alternate-payroll-covered-period\/","title":{"rendered":"Understanding the Alternative Payroll Covered Period (APCP) under the PPP"},"content":{"rendered":"\t\t
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Can you increase PPP forgiveness by leveraging the APCP?<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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For Paycheck Protection Program (PPP) borrowers, ensuring maximum forgiveness on their loan has been anything but straightforward. In our most recent CWA webinar explaining the PPP forgiveness application<\/a><\/span>, notable highlights of the recently released forgiveness application were explained.<\/p>

While the SBA\u2019s form provided clarity on some topics, it introduced more questions and confusion around others. Notably, the application instructions introduced the new concept of an alternative payroll covered period (referred to as APCP) as a substitute payroll period, offering borrowers the choice to replace the normal 8-week covered period (CP).<\/p>

HOW THE COVERED PERIOD DIFFERS FROM THE ALTERNATIVE PAYROLL COVERED PERIOD<\/strong><\/span><\/h5>

The CP begins on the date the funds were received and ends 56 days after that date. \u00a0While the APCP, if elected, begins on the first day of the first pay period following the disbursement of the PPP funds<\/em> and\u00a0 ends 56 days after that<\/em> date.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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This new covered period provides a potential<\/em> opportunity for small business owners to increase the PPP forgiveness associated with payroll-related costs, in particular, for businesses that remained closed after receipt of the PPP funds.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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Employers that select the APCP must be on a bi-weekly or more frequent pay schedule or must switch to this level of frequency.<\/em><\/strong> Based on this guidance, the APCP would not apply to employers that use a semi-monthly payroll.\u00a0 A bi-weekly payroll pays your employees every two weeks and results in 26 pay dates a year, while a semi-monthly payroll pays employees twice per month (for example on the 15th<\/sup> and then final day of the month) and results in 24 pay dates.<\/p>

If there is going to be a material impact on forgiveness, an employer should consider changing their payroll frequency in order to take advantage of the APCP.\u00a0 Keep in mind that it could be administratively burdensome to switch pay periods as many payroll deductions will also need to be adjusted.<\/p>

It is important to note that the APCP is only available for payroll costs and does not change the CP for non-payroll qualified expenses (i.e. rent, utilities & interest)<\/em>.<\/p>

Scenarios Illustrating the Application of the APCP<\/strong><\/h5>

For purposes of explaining how the APCP may be relevant to your PPP forgiveness strategy, please see the following three illustrations. \u00a0<\/p>

For all three scenarios, the following assumptions apply:<\/em><\/p>