We own a restaurant and had to close temporarily last week and layoff 39 employees. We want to re-open when things settle down as we’ve been in business almost 30 years. My question is if we haven’t kept our employees on the payroll can we take advantage of getting the utilities and rent assistance?
Answer: In order for the loan amounts to be forgiven, the business must maintain the same number of employees (equivalents) from February 15, 2020 through June 30, 2020 as it did during either the same period in 2019 or from January 1, 2020 until February 15, 2020. To the extent this requirement is not met, the amount eligible for forgiveness will be reduced, ratably. Additional reductions in the amount to be forgiven will be incurred if employees with under $100,000 of compensation have their compensation cut by more than 25% as compared to the most recent quarter.
HOWEVER – there is flexibility for business that re-hire workers that were previously laid off.
Declines in headcount or wages between February 15, 2020 and April 26, 2020 will not trigger a reduction in loan forgiveness if the business reverses the decline and returns to pre-decline levels by June 30, 2020. Loan forgiveness will not be included in a business’s taxable income.