FOOD & AGRICULTURE QUARTERLY | JUNE 2020
might affect a borrower’s forgiveness using the steps
provided in the Forgiveness Application.
Example 1:
1. Determine if pay was reduced more than 25 percent
a. Enter average annual salary or hourly wage
during Covered Period or Alternative Payroll
Covered Period
b. Enter average annual salary or hourly wage
between Jan. 1, 2020 and March 31, 2020
$10
$12
c. Divide the value entered in 1a by 1(b) 0.83
∙ If 1(c) is 0.75 or more, then the forgiveness
amount is not reduced as a result of the
reduction in the employee’s pay.
ANALYSIS: Here, the analysis would stop because the
amount of decrease in this employee’s hourly wages was
less than 25%. Thus, there would be no reduction to the
forgiveness amount for this employee.
Example 2:
1. Determine if pay was reduced more than 25 percent
a. Enter average annual salary or hourly wage
during Covered Period or Alternative Payroll
Covered Period
b. Enter average annual salary or hourly wage
between Jan. 1, 2020 and March 31, 2020
$8
$12
c. Divide the value entered in 1(a) by 1(b) 0.67
∙ Because the reduction is more than 25%,
the borrower must proceed to Step 2.
2. Determine if the Salary/Hourly Wage Reduction Safe
Harbor is met
(a)
(b)
(c)
Enter the annual salary or hourly wage as of
Feb. 15, 2020
Enter the average annual salary or hourly
wage between Feb. 15, 2020 and April 26,
2020
∙ If 2(b) is equal to or greater than 2(a), skip to
Step 3. Otherwise, proceed to 2(c).
Enter the average annual salary or hourly
wage as of June 30, 2020
∙ If 2(c) is equal to or greater than 2(a), the
Salary/Hourly Wage Reduction Safe Harbor
has been met. Otherwise, the borrower
must proceed to Step 3 (described in the
next example).
$12
$8
$12
ANALYSIS: Although there was more than a 25 percent
decrease in this employee’s hourly wage, the borrower will
not suffer any reduction to the forgiveness amount because
the borrower was able to restore the employee’s hourly
wage by June 30, 2020. Because the safe harbor was met,
the analysis stops there, and the borrower does not have to
proceed to step 3 for that employee.
Example 3:
1. Determine if pay was reduced more than 25 percent.
a. Enter average annual salary or hourly wage
during Covered Period or Alternative Payroll
Covered Period
b. Enter average annual salary or hourly wage
between Jan. 1, 2020 and March 31, 2020
$8
$12
c. Divide the value entered in 1(a) by (b) 0.67
∙ Because the reduction is more than 25%,
the borrower must proceed to Step 2.
2. Determine if the Salary/Hourly Wage Reduction Safe
Harbor is met
a. Enter the annual salary or hourly wage as of
Feb. 15, 2020
b. Enter the average annual salary or hourly wage
between Feb. 15, 2020 and April 26, 2020
∙ If 2(b) is equal to or greater than 2(a), skip to
Step 3. Otherwise, proceed to 2(c)
c. Enter the average annual salary or hourly wage
as of June 30, 2020
∙ Because 2(c) is not equal to or greater than
2(a), the Salary/Hourly Wage Reduction Safe
Harbor has not been met and the borrower
must proceed to Step 3.
3. Determine the Salary/Hourly Wage Reduction
a. Multiply the amount entered in 1(b) by 0.75
(12 x .75)
b. Subtract the amount entered in 1(a) from 3(a)
( $9 - $8)
∙ If the employee is an hourly worker,
compute the total dollar amount of the
reduction that exceeds 25 percent as
follows:
c. Enter the average number of hours worked
per week between Jan. 1, 2020 and March 31,
2020
d. Multiply the amount entered in 3(b) by the
amount entered in 3.c (40 hours per week x $1
- $40). Multiply this amount by 8: $40 * 8 weeks
$12
$8
$10
$9
1
40
$320
ANALYSIS: Here, there was a reduction in hourly wages of
more than 25 percent and the borrower did not meet the
safe harbor. Thus, its forgiveness amount would be reduced
by the amount of the wage decrease (in this case $320) for
this employee during the chosen covered period.
FTE Reduction
A borrower’s expected forgiveness amount (meaning
the amount spent on eligible costs during the applicable
forgiveness period) minus any Salary/Hourly Wage
Reduction (discussed above) will be ratably reduced if its
FTE employees during the covered period are less than
its FTE employees in one of two Measurement Periods as
chosen by the borrower:
∙
∙
∙
Feb. 15, 2019 to June 30 2019; OR
Jan. 1, 2020 to Feb. 29, 2020; OR
in the case of seasonal employers, either of the
PAGE 11