***UPDATE JUNE 16, 2020*** – The SBA and Treasury have released a revised loan forgiveness application and a new E-Z simplified loan forgiveness application. This follows the enactment of the Paycheck Protection Program (PPP) Flexibility Act on June 5, 2020.
For more information on the revised loan forgiveness applications and instructions on how to complete the applications, please read Revised PPP Loan Forgiveness Applications Released on our website.
On Friday, May 15, 2020, the U.S. Small Business Administration (SBA), in conjunction with the Department of the Treasury, issued highly anticipated guidance, enabling loan recipients to claim forgiveness of their Paycheck Protection Program (“PPP”) loans. A revised loan forgiveness application and instructions, provide clarification on how to apply for forgiveness.
According to the SBA website, loan forgiveness eligibility is:
- Based on the employer maintaining or quickly rehiring employees and maintaining salary levels.
- Reduced if full-time headcount declines, or if salaries and wages decrease.
The loan forgiveness application and instructions include several measures to reduce compliance burdens and simplify the process for borrowers, including:
- Options for borrowers to choose to extend the eight-week period to 24 weeks.
- Options for borrowers to calculate payroll costs using an “alternative payroll covered period” that aligns with borrowers’ regular payroll cycles.
- Flexibility to include eligible payroll and non-payroll expenses paid or incurred during the defined covered or alternative covered period after receiving their PPP loan.
- Step-by-step instructions on how to perform the calculations required by the CARES Act and Flexibility Act to confirm eligibility for loan forgiveness.
- Borrower-friendly implementation of statutory exemptions from loan forgiveness reduction based on rehiring employees.
- Addition of a new exemption from the loan forgiveness reduction for borrowers who have made a good-faith, written offer to rehire workers that was declined.
We are committed to providing you with information and resources needed to make informed decisions for the future of your organization. We will continue to update this article with new information as it becomes available.
Please do not hesitate to contact us with any questions. Stay safe and healthy!
Get ready, because by subscribing to our email insights, you'll be among the first to hear from our experts about key issues directly impacting your privately held business or not-for-profit.