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. Included in the new guidance is the PPP Loan Forgiveness application and instructions, detailing how to apply for the 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 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 eight-week period after receiving their PPP loan.
- Step-by-step instructions on how to perform the calculations required by the CARES Act to confirm eligibility for loan forgiveness.
- Borrower-friendly implementation of statutory exemptions from loan forgiveness reduction based on rehiring by June 30.
- 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!