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Jun 2020
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June 18, 2020

SBA Streamlines PPP Forgiveness Application for Certain Borrowers and Revises Existing Forgiveness Application

On June 17, 2020, the Small Business Administration (SBA) released a new borrower-friendly, three-page “EZ” Paycheck Protection Program (PPP) loan forgiveness application (EZ Application), and also released a revised version of its original forgiveness application for borrowers who do not qualify to use the EZ Application. 

The EZ Application requires less documentation and fewer calculations than the original application released in mid-May. To qualify to use the EZ Application, a borrower must meet one of the following criteria: 
 
  • The borrower is a self-employed individual, independent contractor or sole proprietor who did not include any employee salaries in the Borrower Application Form. 
  • The borrower did not reduce the salaries or wages of its employees by more than 25 percent during the covered period as compared to the period between January 1, 2020, and March 31, 2020, and did not reduce the number of its employees or average paid hours of its employees between January 1, 2020, and the end of the covered period (ignoring reductions for employers who are unable to rehire employees or hire similarly qualified employees for unfilled positions and reductions in hours that the borrower offered to restore and the employee refused). 
  • The borrower did not reduce the salaries or wages of its employees by more than 25 percent during the covered period as compared to the period between January 1, 2020, and March 31, 2020, and was unable to operate at the same level of business as before February 15, 2020, as a result of complying with federal health directives related to COVID-19. 

The EZ Application can be found HERE. The instructions for the EZ Application are HERE

In addition to the EZ Application, the SBA also released a revised version of the forgiveness application for all other borrowers. The revised version is intended to address the PPP Flexibility Act’s revisions to the PPP requirements. Under the revised application, for purposes of loan forgiveness, borrowers may select either: (1) a 24-week covered period beginning on the PPP loan disbursement date, or the first day of the first pay period following the disbursement date; or (2) if the borrower received its PPP loan before June 5, 2020, an eight-week covered period. To avoid a loan forgiveness reduction, borrowers with a 24-week or an eight-week covered period must maintain their average weekly full-time equivalent (FTE) employee levels and average wage levels for the entire covered period as compared to the base measuring periods for FTE employee levels and wages, unless an exception or safe harbor for a reduction in FTE employee levels or wages applies. 

The applicable safe harbors and exceptions are as follows: 
 
  • The borrower reduced its FTE employee levels in the period beginning February 15, 2020, and ending April 26, 2020, and then restored its FTE employee levels by December 31, 2020, to its FTE employee levels in the pay period that included February 15, 2020. 
  • The borrower is able to document in good faith an inability to return to the same level of business activity at which the business was operating before February 15, 2020, due to compliance with federal health directives, requirements or guidance related to COVID-19 issued between March 1, 2020, and December 31, 2020. 
  • Particular FTE reductions were for: (1) any positions for which the borrower made a good-faith, written offer to rehire an individual who was an employee on February 15, 2020, and the borrower was unable to hire similarly qualified employees for unfilled positions on or before December 31, 2020; (2) any positions for which the borrower made a good-faith, written offer to restore any reduction in hours, at the same salary or wages, during the covered period and the employee rejected the offer; (3) any employees who during the covered period were fired for cause, voluntarily resigned or voluntarily requested reduced hours. Any FTE reductions in these cases do not reduce the borrower’s loan forgiveness. 

The revised application can be found HERE.  The instructions for the revised application are HERE

The rules surrounding PPP loans are complex and business specific. If you have concerns about the rules, please contact Ford Turrell, Timothy Hillegonds, Rob Davies, Matthew Crowe, Charlie Goode, Jeffrey Ott or your Warner attorney.

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