Reflecting changes made to the Small Business Administration’s (SBA) Paycheck Protection Program (PPP) with enactment of The Paycheck Protection Program Flexibility Act of 2020 earlier this month, SBA has released a revised loan forgiveness application and instructions. This follows the issuance of a new interim final rule for guidance on calculating employee and owner compensation for loan forgiveness in the new 24-week covered period under the Paycheck Protection Flexibility Act, and provides a new EZ application with instructions.
Borrowers can use the EZ application if they can check one of three boxes.
- Borrower is a self-employed individual, independent contractor, or sole proprietor who has no employees;
- Borrower did not reduce wages of any employee by more than 25% and did not reduce the number of employees or average paid hours; or
- Borrower did not reduce wages of any employee by more than 25%, AND was unable to operate at the same level of business.
The form instructions include additional details and exceptions that borrowers should consider before adopting the EZ application.
A borrower may submit a loan forgiveness application any time on or before the maturity date of the loan – including before the end of the covered period – if the borrower has used all of the loan proceeds for which the borrower is requesting forgiveness. However, if a borrower has reduced any employee’s salaries or wages in excess of 25 percent, the borrower must account for the excess salary reduction for the full 8-week or 24-week covered period. Read more in the SBA’s interim final rule.
Shortly before the Independence Day holiday, President Trump signed a bill extending the application period for the PPP until August 8. For additional background on PPP loan forgiveness, see our alert, President Trump Signs Bill Making Significant Changes to the PPP.
Bookmark GRF’s COVID-19 Response resource page for the latest information and resources to help businesses, nonprofits and individuals weather the pandemic and resulting economic crisis. If you have questions related to the PPP or loan forgiveness, contact your CPA or email email@example.com.