New Improved User-Friendly PPP Loan Forgiveness Applications & PPP Forgiveness Limits Revised

The Small Business Administration (SBA) and the Treasury Department launched an improved user-friendly forgiveness application for the Paycheck Protection Program (PPP) along with revising the full forgiveness application. There is approximately $125 billion remaining in the program and applications are still being accepted until June 30.

The EZ application requires less calculations and documentation to be done.  This new version applies to borrowers who: are self-employed and have no employees or did not reduce the salaries or wages of their employees by more than 25% and didn’t reduce the number of hours of their employees or experienced reductions in business activity because of health directives related to the Coronavirus. 

Both the new and the revised full application allow eligible borrowers the option of using the original eight-week covered period (on loans made before June 5) or the extended 24-week covered period offered under the new PPP Flexibility Act. These changes should result in a more efficient process and make it easier for businesses to realize full forgiveness of their PPP loan.

Click here to view the new EZ Forgiveness Application. 

Click here to view the revised Full Forgiveness Application.  

PPP FORGIVENESS LIMITS REVISED

The SBA and Treasury Department revised a previously released Interim Final Rule (IFR) to include a discussion of what amounts are eligible for forgiveness under the optional 24-week covered period that may be selected by recipients of PPP loans.

There is a new maximum amount of payroll costs for employees (a maximum of $46,154 per individual for 24-weeks, or $15,385 per individual for 8-weeks), and a new limit for owners. Owners do not get a 24-week maximum but are limited to 2.5 months’ maximum.

The SBA, in consultation with the Treasury Secretary, had previously determined that it is appropriate to limit the forgiveness of owner-employee (S and C Corporation) compensation or self-employed individuals, general partners and active LLC members net profit to 8-weeks’ worth (8/52) of 2019 compensation/net profit (up to $15,385) for an 8-week covered period. The revised IFR added the limit on forgiveness for a 24-week covered period, to 2.5 months’ worth (2.5/12) of 2019 compensation/net profit (up to $20,833) per individual in total across all businesses. This approach is consistent with the structure of the CARES Act and its overarching focus on keeping workers paid, and will prevent windfalls that Congress did not intend.

The amount of loan forgiveness can be up to the full principal amount of the loan plus accrued interest. The actual amount of loan forgiveness will depend, in part, on the total amount spent over the 24-week period beginning on the date your PPP loan is disbursed (“covered period”) on. Borrowers that received PPP loans before June 5, 2020 can elect to use the original 8-week period.

At least 60% of the amount forgiven must be attributable to payroll costs.

To view the complete text of the revised Interim Final Rule, click here