Divide by 40, Indeed

May 18, 2020 Alerts and Newsletters

In response to prior posts on Paycheck Protection Program math, I did receive several messages suggesting that 30 hours – and not 40 as I had stated – was the proper basis for computing FTEs. With each successive scolding, my replies justifying 40 hours got lengthier and lengthier – roughly in inverse proportion to my waning self-confidence about my initial, somewhat rash, choice of denominator.

After what has seemed like an interminable delay, the SBA on Friday, May 15 has now clarified the FTE calculation. Page seven of the Loan Forgiveness Application Instructions for Borrowers states:

Average FTE: This calculates the average full-time equivalency (FTE) during the Covered Period or the Alternative Payroll Covered Period. For each employee, enter the average number of hours paid per week, divide by 40, and round the total to the nearest tenth.”

See: https://www.sba.gov/document/sba-form--paycheck-protection-program-loan-forgiveness-application.