Paycheck Protection Program Loans (PPP)
June 22, 2020
The SBA has streamlined PPP Forgiveness Application for many PPP borrowers.
To our PPP clients:
On June 11, 2020, the U.S. Small Business Administration ("SBA") issued an interim final rule (the "Interim Final Rule") implementing the changes made to the SBA’s Paycheck Protection Program (the "PPP") by the Paycheck Protection Program Flexibility Act of 2020 (the "PPP Flexibility Act"). The PPP Flexibility Act changed many aspects of the PPP , two of which include:
- Giving the borrower the option of using the original 8-week covered period (if their loan was made before June 5, 2020), or extending the covered period for loan forgiveness to 24 weeks, which provides greater flexibility for borrowers to qualify for loan forgiveness.
- Lowering the requirements from 75% to 60% of a borrower’s loan proceeds that must be used for payroll costs during the 24-week loan forgiveness period. If a borrower uses less than 60% of the loan amount for payroll cost during the forgiveness period, the borrower may be eligible for partial loan forgiveness.
The Small Business Administration released a three-page “EZ” Paycheck Protection Program loan forgiveness application requiring less documentation and fewer calculations than previously required. Form 3508EZ applies to borrowers who meet any one of these three criteria:
- Applied for the PPP loan as self-employed, an independent contractor or a sole proprietor with no employees.
- Did not reduce salary or wages for any employee by more than 25%, and did not reduce the number or hours of their employees (excepting laid-off employees who refused an offer to return).
- Did not reduce salary or wages for any employee by more than 25% during the covered period and experienced reductions in business activity as a result of health directives related to COVID-19
The streamlined forgiveness form is expected to smooth the forgiveness application process for a substantial portion of PPP borrowers. SBA also updated the regular Form 3508 to reflect recent changes made by Congress in the PPP Flexibility Act and issued a new interim final rule that implements changes made by the PPPFA.
*Please note that we are still awaiting guidance from the SBA regarding the submission process for the forgiveness application. We ask that you not submit your forgiveness application to us until we receive that guidance. We will update our website when we are ready to accept the forgiveness applications.