Revisions to the PPP Loan Forgiveness Application

Please note: This blog is current to the date of its publication, Thursday, June 18. For additional updates or assistance navigating these uncertain times, please contact us or visit our SST COVID-19 resource page.

 

The Small Business Administration (SBA) recently released a new interim final rule, which revises the Paycheck Protection Program (PPP) Loan Forgiveness Application to reflect the implementation of the PPP Flexibility Act. This Act, which was signed into law on June 5, is intended to help Borrowers maximize PPP loan forgiveness.

The new interim final rule includes the following changes as part of the PPP Flexibility Act:

  • An extension of the Alternative Payroll Covered Period from eight weeks to 24 weeks, not to extend beyond Dec. 31, 2020
  • Expansion of the maturity date of PPP loans to five years
  • Clarification on use of loan proceeds, including an expansion of the allocation between payroll and non-payroll costs to 60% and 40%, respectively
  • Updated loan forgiveness for payroll costs, including an increased maximum amount of $15,385 (8-Week Covered Period) and $46,154 (24-Week Covered Period) for individual employees’ salaries, wages and tips
  • Updated loan forgiveness for owner compensation, including an increased maximum amount of $15,385 (8-Week Covered Period) and $20,833 (24-Week Covered Period)
  • Inclusion of business mortgage, rent and utility payments for sole proprietors, listed on Form 1040 Schedule C as eligible for forgiveness

Significant revisions to the PPP Loan Forgiveness Application are as follows, and instructions for successfully completing the Application can be found here.

  • Extension of the Alternative Payroll Covered Period from eight weeks to 24 weeks
  • Changes to and clarification of FTE reduction exceptions
  • Clarification on employer health insurance and retirement contributions

The SBA also released the EZ PPP Loan Forgiveness Application, along with specific instructions, that can be used by Borrowers who meet the following criteria:

  • Self-employed, independent contractors or sole proprietors with no employees at the time of submitting their PPP Loan Application
  • Borrowers who did not decrease wages by more than 25% and did not reduce the number of employees or the average paid hours of employees during the Covered Period
  • Borrowers who did not reduce salaries or wages of any employee by more than 25% during the Covered Period and were unable to operate during the Covered Period at the same level as prior to Feb. 15, 2020

For further guidance on PPP Loan Forgiveness Applications, visit our website to explore SST’s full list of PPP-related services and resources, including a recent webinar hosted by SST CEO Bill Sims and Partner Emily Cook on strategies for maximizing loan forgiveness.

 

Thanks to SST Partner Emily Cook for providing the content for this blog post. Click here to learn more about Emily.