On June 16, 2020, the U.S. Small Business Administration(“SBA”) released a revised loan forgiveness application and a new EZ application for forgiveness of Paycheck Protection Program (“PPP”) loans.
The PPP is a loan designed to provide a direct incentive for small businesses to keep their workers on the payroll. On June 5, 2020, the Paycheck Protection Flexibility Act(“PPFA”) became law and it made several changes to the PPP such as extended covered period (from 8-week to 24-week), reduced payroll expenditure requirements (from 75% to 60%), and etc. The newly released applications reflect changes made by the PPFA.
EZ PPP Loan Forgiveness Application (SBA Form 3508EZ) requires fewer calculations and less documentation than the full application. The EZ application can be used if a borrower meets any of the following:
- The borrower is a self-employed individual, independent contractor, or sole proprietor who had no employees at the time of the PPP loan application and did not include any employee salaries in the computation of average monthly payroll in the borrower application form,
- The borrower did not reduce annual salary or hourly wages of any employee by more than 25 percent during the covered period, and the borrower did not reduce the number of employees or the average paid hours of employees, or
- The borrower did not reduce annual salary or hourly wages of any employee by more than 25 percent during the covered period and the borrower was unable to operate during the covered period at the same level of business activity due to compliance with health requirements and guidance
As the PPFA tripled the covered period during which PPP borrowers could spend the funds and still qualify for forgiveness, the SBA also released interim final rule which adjusts the maximum payroll costs from $100,000 annualized per employee, or $15,385 per individual to $46,154 per individual.
For more details, please refer to the following links:
Revised PPP Loan Forgiveness Application:
- Instructions: https://www.sba.gov/document/sba-form--paycheck-protection-program-loan-forgiveness-application-instructions-borrowers-6-16-2020
EZ PPP Loan Forgiveness Application:
- Instructions: https://www.sba.gov/document/sba-form--paycheck-protection-program-ez-loan-forgiveness-application-instructions-borrowers-6-16-2020
Interim final rule: