PPP Loan Forgiveness Application Updated for Flexibility Act Rules

By Brandon Allfrey, Brandona@squire.com 

On June 16th, the Treasury and SBA released changes to the PPP Loan Forgiveness Application after changes to the program were made by the PPP Flexibility Act (PPPFA). Additionally, they have released updates to the interim rules regarding parts of the loan forgiveness calculations. 

Perhaps the most exciting development was the introduction of a Loan Forgiveness Application EZ Form. This is welcome news after initially having an 11-page application with multiple steps that may not apply to many businesses. The EZ application is a one-page calculation of loan forgiveness, followed by one page of certifications from the borrower, and a signature page. Businesses must meet one of the following conditions to use the new EZ form: 

• The borrower is self-employed and has no employees; or 
• The borrower did not reduce the salaries or wages of employees by more than 25% during the covered period AND didn’t reduce the number of hours of their employees; or 
• The borrower has reduced business activity due to health directives related to COVID-19, AND did not reduce the salaries or wages of employees by more than 25% 

For businesses that do not meet these criteria, the regular application has been reduced to five pages, which includes the schedules needed for calculating reduction of wages and FTE measurements for forgiveness determination. The application allows the borrower to choose either an 8- or 24-week covered period allowed by the PPPFA, as does the EZ application.  

The updated application forms help to make the PPP Loan forgiveness application process more efficient. The changes made under the PPPFA will hopefully make it easier for borrowers to achieve full forgiveness as intended under the CARES Act.  

The updates to Treasury’s Interim Rules confirm the maximum payroll costs eligible forgiveness under the covered period is $46,154 per employee for the 24-week measurement, as opposed to $15,385 under the 8-week period. Also, loan forgiveness for self-employed individuals receiving PPP funds is increased to a maximum of 2 ½ months’ worth of 2019 net profit (maximum of $20,833) for a 24-week covered period ($15,385 for the 8-week period). More clarifications under the PPPFA are expected in near future to help clarify specific questions.  

While a certain amount of calculating is still required for these forgiveness applications, navigating the process has been made easier. Borrowers need to assess which covered period to choose and examine the forgiveness measurements required in the applications for determining the loan forgiveness amounts. This will help businesses determine when to file their loan forgiveness applications. Visit www.squirecares.com for additional information, tools, and requests for help in this process.