On June 17, 2020, in light of the recent changes to the Paycheck Protection Program (“PPP”) by the Paycheck Protection Program Flexibility Act, the SBA released a revised Loan Forgiveness Application (“Full Loan Forgiveness Application”) as well as a new “EZ” Loan Forgiveness Application Form. According to a recent SBA press release here, the revised Loan Forgiveness application is meant to be more “borrower-friendly.”
The new applications operate largely like the original application, with no “surprises.” Amended merely to accommodate the specific changes of the PPP Flexibility Act, the new Full Loan Forgiveness Application Form:
- Expands the “covered period” from an 8-week (56-day) covered period to a 24-week (168-day) covered period (with borrowers whose Loans were funded prior to June 5 being able to elect to retain the 8-week period).
- Reduces the payroll costs threshold from 75% to 60%.
- Expands the period during which employers may return FTE and salary/wage amounts to their original levels to avoid loan forgiveness amount reductions to December 31, 2020.
- Accounts for the new safe harbor for FTE employee reductions under which employers can avoid loan forgiveness penalties for FTE reductions if they are able to document that their business has not returned to pre-February 15, 2020 levels due to compliance with certain Department of Health and Human Services (“HHS”), Centers for Disease Control and Prevention (“CDC”) and Occupational Safety and Health Administration (“OSHA”) guidance relating to social distancing, workplace sanitation, and other worker or customer safety requirements related to COVID-19.
In lieu of using the revised Full Loan Forgiveness Application, a borrower may elect to use a new three-page “EZ” Loan Forgiveness Form if it meets one of the following:
- The borrower is self-employed or a sole proprietor with no employees (and included no employee payroll costs in his or her original loan application);
- The borrower did not engage in a salary/wage or FTE reduction that would trigger a loan forgiveness penalty; or
- The borrow did not engage in a salary/wage reduction that would trigger a loan forgiveness penalty but did reduce FTEs – BUT can demonstrate that its FTE reduction was due to a reduction in business activity resulting from compliance with COVID-19 guidance issued by HHS, CDC, or OSHA.
The revised applications continue to call for employee-by-employee calculations that may overstate payroll costs charged to PPP Loans for entities that do not charge all of the payroll costs they could charge to the PPP program, such as portions of salaries/wages and health benefits that employers allocate to federal grants.
For a full discussion of the PPP and Loan Forgiveness guidance in a topical easy-to-follow framework, FTLF offers a PPP Loan Forgiveness Toolkit. This Toolkit is designed to provide “right-sized” assistance to entities in need of straight-forward guidance coupled with two-hours of consultation on how the PPP program rules and application calculations apply to their specific circumstance. Learn more or purchase here.
For questions, please do not hesitate to contact Michael Glomb, Joseph Loman, and Scott Sheffler. For inquiries on the Toolkit, please also feel free to reach out to PPPSupport@ftlf.com.
 Pub. L. 116-142 (Jun. 5, 2020).