The Paycheck Protection Program (PPP) helps small businesses by offering a loan to cover payroll, mortgage, rent, utilities and certain benefits.  For the loan to be forgiven at least 75% must be for payroll.

However, there are additional requirements regarding maintaining the company’s full-time equivalent (FTE) count during the eight-week period as before COVID-19 in order to get the maximum loan forgiveness.

When companies apply for PPP loan forgiveness, lenders and the SBA will require information regarding the number of full-time equivalent (FTE) employees during specific periods.  Your FTE may not be the same as the number of actual people you had on payroll, especially if you had turnover or part-time employees.

All full-time employees count as one FTE. Any part-time employees will have their average weekly hours worked added together. As an example, two part-time employees who each work 20 hours equate to one FTE. Overtime does not apply to calculations.
To get the full amount of loan forgiveness, businesses must determine the average number of FTEs for a variety of periods:

  • Average FTE 8 weeks following Loan Disbursement
  • Average FTE February 15, 2019 to June 30, 2019
  • Average FTE January 1, 2020 to February 29, 2020

The ratio of FTE at Loan Disbursement and selected measurement period are used to determine the Forgiveness Reduction Factor.  If the company has ratio of 1 or higher, the entire loan may be forgiven.  Any ratio less than one establishes a new Forgiveness Reduction Factor to establish the amount of loan eligible for forgiveness and baseline for the 75% of the loan which must be used for payroll.

If you rehire employees which were previously laid off at the beginning of the period, or restore any decreases in wage or salary which were made at the beginning of the period, you will not be penalized for having a reduction in employees or wages, as long as you do this by June 30, 2020.

Employees who were laid off or put on furlough may not wish to be rehired onto payroll. If the employee rejects your re-employment offer, you may be allowed to exclude this employee when calculating forgiveness. To qualify for this exemption:

  • You must have made a written offer to rehire in good faith
  • You must have offered to rehire for the same salary/wage and number of hours as before they were laid off
  • You must have documentation of the employee’s rejection of the offer
Does this sound complicated? 


Let Time Equipment Company help. We deliver reports calculating your FTEs for these various time periods so you can be eligible for the maximum loan forgiveness.  An updated PPP Loan Forgiveness Guide is available below.