In consultation with the Treasury Department, the U.S. Small Business Administration (SBA) released (June 17) a revised loan forgiveness application for the Paycheck Protection Program (PPP). The SBA also unveiled a new EZ application for forgiveness of PPP loans.
The applications reflect changes to the PPP made by the Paycheck Protection Flexibility Act, which became law on June 5. The applications and instructions are available in the links below:
Both releases came only hours after the SBA issued a new interim final rule providing guidance on how to calculate employee and owner compensation for loan forgiveness in the new 24-week covered period created by the Paycheck Protection Flexibility Act. Congress passed the Paycheck Protection Flexibility Act to make it easier to qualify for full loan forgiveness.
Besides expanding the â€œcovered periodâ€ for loan forgiveness to 24 weeks from eight weeks, the Act reduces the proportion of proceeds that must be spent on payroll costs to 60% from 75%, and establishes a safe harbor for businesses that have been unable to return to the level of business activity they had before the COVID-19 pandemic due to compliance with health and safety guidelines to slow the spread of the virus.
The revised PPP Loan Forgiveness Application and instructions include a number of important items, such as calculating health insurance costs for S corporation owners and safe harbors. The new EZ PPP application, among other features, requires fewer calculations and less documentation than the full application. The EZ application can be used by borrowers who are self-employed with no employees, and by borrowers who are not subject to statutory reductions from reducing salaries or wages by more than 25% or did not reduce Full-Time Equivalent (FTE) employees. See full details here.
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