Important Definitions

What is a Covered Period?

Eligible expenses paid within the covered period are allowable for forgiveness. There is some flexibility in choosing the covered period and your decision may impact the total amount forgiven. If you are unsure, please reach out to your tax professional for advice.

  • The standard covered period is 24 weeks from the date of disbursement of the PPP loan.
    • For Example: For a PPP loan disbursed Monday April 20, the Covered Period is Monday April 20 through Sunday, October 4.
  • PPP loans that were disbursed before June 5, 2020, can use an eight-week (56-day) Covered Period.
  • If payroll is biweekly (or more frequent) borrowers can shift the Covered Period to the first day of the first pay period following the PPP Loan Disbursement Date.
    • For Example: if the first day of the first pay period after the PPP loan date (from the example above) is Sunday, April 26, an Alternative Payroll Covered Period from April 26 to Saturday, October 10 may be used (if using a 24 week covered period)

What is a Reference Period?

A reference Period is intended as a reference to Compare employees’ work hours and pay in the Covered Period. The SBA gives some flexibility in choosing a reference period; If you are unsure, please reach out to your tax professional for advice.

  • February 15, 2019 through June 30, 2019; OR
  • January 1, 2020 and February 29, 2020;

For seasonal employers: any consecutive 12-week period between May 1, 2019 and September 15, 2019.

The SBA requires borrowers to provide payroll information for the Reference Period and the Covered Period to verify that employment was protected without cutting hours, positions or wages.

Be prepared to provide documentation around money paid and hours worked for each employee in the Covered and Reference Periods. Supporting documents include; payroll reports, federal and state tax filings including quarterly payroll taxes, bank statements and canceled checks.

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